A Semiotic Analysis of Corporate Language - Organizational Boundaries and Joint Venturing

A Semiotic Analysis of Corporate Language: Organizational Boundaries and Joint Venturing Author(s): C.
Marlene Fiol Source: Administrative Science Quarterly, Vol. 34, No. 2 (Jun., 1989), pp. 277-303 Published by: Sage Publications, Inc. on behalf of the Johnson Graduate School of Management, Cornell University Stable URL: http://www.jstor.org/stable/2989899 . Accessed: 18/06/2013 16:19
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A Semiotic Analysis of CorporateLanguage: Organizational Boundariesand Joint Venturing C. Marlene Fiol

New YorkUniversity
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." ORGANIZATIONALBOUNDARIES 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, particularlywith respect to joint-venture strategies. Joint-venture relationships require shared control of particularactivities 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.
? 1989 by Cornell University. 0001-8392/89/3402-0277/$1 .00.

0
for Manypeople deserve recognition semiotic helpingme presentthe narrative method used in this study.The creditfor is achievingthe present level of clarity Janice largelytheirs:Stephen Barley, RogerDunbar, Beyer,Janet Dukerich, Jane Dutton,William Guth,James Hoover, Anne Huff,Marjorie Lyles,FrancesMilliken,LindaPike,and the editorand anonymous reviewers of Administrative Science Quarterly. This research was par-
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 manifesta277/AdministrativeScience Quarterly,34 (1989): 277-303
tiallysupportedby a grantfromthe Tenneco Fund.
tions 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 internalsubunits. 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 likelyto exhibitweak boundaries separatingthe companyfrom externalenvironments and subunits. Conversely, strong boundariesamong organizational nonfirmsare likelyto exhibitstrong boundaries joint-venturing separating the companyfrom externalenvironmentsand weak boundaries among organizational subunits. While letters to shareholders directly communicate facts about a firm, they also communicate implicit beliefs aboutthe organization and its relationships with the surroundingworld. A semiotic method of textual analysis is used in this paperto 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 ORGANIZATIONALBOUNDARIES 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. Semiotics is a formal mode of analysis used to identifythe rules that govern how signs convey meanings in a particular social system (Eco, 1979). With roots in the structurallinguistic principles of Saussure (1916), it uses linguistic sign systems as a model to identify and make explicit the rules governing other systems of signification, e.g., symbolic behaviors or physical trappings. The signs that combine to convey meaning in natural language systems are words. Grammatical rules govern their meaningful combinations. Semiotics assumes that a similar set of rules or social conventions governs the choices and constraints that determine expressions of meaning in other social systems. Forexample, manner of dress is a sign system conveying social meanings. A single sign, such as a woman's hat, may variously denote modesty, religiosity, or style, depending on the conventions of a particularcontext. Different signs within the same system (other articles of clothing) may denote the same meaning, again based on social conventions. Semiotics assumes that diverse signs or expressions can convey shared meaning because they are grounded in a common set of underlying values. It further assumes that a
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Organizational Boundaries
value can be defined only in relation to its logical opposites. A frequently used illustration (Greimas, 1966) is that "love" has no meaning without the opposed concepts of "hate," "nonlove," and "non-hate." Thus the rules that regulate meaning are based on underlying oppositions that define the values embedded in the system. Different forms of semiotics have emerged for the study of different kinds of sign systems. Though all forms of the method assume that the meaning of individualsigns is grounded in underlying value oppositions, they differ in the manifestation of signs that is the focus of study. Saussurean semiotics (Saussure, 1916; Eco, 1979) examines the links between natural language signs and the meanings they signify. A derivative of Saussure's model has been applied to the analysis of behavioral signs and their meanings. By semiotically analyzing the rules that regulate the meaning of work in a funeral home business, for example, Barley (1983) demonstrated that a recurrent underlying value-the denial of death -permeated the firm's culture and determined how all work decisions and actions took place. Narrative, or Greimassian semiotics (Greimas, 1966), another form of the method, treats a narrative or group of narratives as the sign system. Its aim is to uncover how narrative components combine to convey meanings within texts. Narrative semiotic analyses of myths, folktales, and other stories relating to social life have been used extensively by anthropologists and sociologists in studies of cultures and interpretive systems (Propp, 1958; Levi-Strauss, 1963, 1976; Manning, 1987). Levi-Strauss, for example, found that shared meanings of multiple and variable myths can be uncovered by identifying stable patterns in the way the stories' components are structured. This study uses narrative semiotic techniques to uncover patterns of internal and external boundary definitions in letters to shareholders. The letters are a particularlyuseful data set for semiotically examining beliefs about boundaries, because (1) they share the common purpose of conveying a positive corporate image to an important constituency, (2) the CEO approves the image that is conveyed, and (3) their production is ruled by a fairly rigid set of conventions governing what must be addressed and in what form. These corporate messages are like folktales in that they tell many stories that can be reordered to extract a set of recurring structures that reflect underlying values. Narrative Semiotic Method Classic narrative theory, as set forth by Russian Formalists (Propp, 1958), defines a narrative as a set of interlocking signs whose meanings are determined by underlying rules that regulate how different units of texts may be combined. A narrative consists of the following elements: a narrative subject in search of an object, a destinator (an extratextual force, the source of the subject's ideology), and a set of forces that either help or hinder the subject in acquiring the desired object. These elements are not actors in the traditional sense. For example, forces of help may consist of the subject's frame of mind, the activities of the subject, or the actions of others in
the story.
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The stories told in letters to shareholders narrate the successes and failures of individuals (e.g., the CEOs), organizational subunits, and the entire company; the narrative subject may be any one of these. The ultimate object of the narrative is in all cases at the firm level and involves the projection of a positive company image to shareholders. The destinator is the corporate and societal environment of the late 1970s, the context within which the subjects of these narratives are operating. The forces of help and hindrance are variably depicted as any of a larger set of potential internal and external narrative forces. The narrative progresses toward a resolution through the relations developed between the subject and other narrative forces. These relations are distinguished on the basis of what is called in semiotics their tonality and modality, narrative components qualifying and characterizing the relations among narrative forces. The tonality of a narrative represents the judgment of the subject on a phenomenon and can be positive or negative. The modality of a narrative distinguishes between the doing and being of the subject and may be pragmatic or cognitive. A pragmatic mode establishes the subject's being-able-to-do, or ability to act. Pragmatic relations between subject and other narrative forces take place within action sequences of the story. A cognitive mode establishes the subject's knowing-how-to-do, or state of mind. Cognitive relations take place outside of action sequences.' Figure 1 depicts the forces and relational elements assumed to exist in a narrative. The modalities are being-able-to-do and knowing-how-to-do. The narrative forces are in boxes. The relationships between them are depicted in the connecting lines. Cognitive relations develop through the subject's interior discourse and represent one source of help and hindrance in achieving the object. Pragmatic relations develop through the subject's action and represent the other source of help and hindrance. Positive or negative tone denotes whether the narrative force with which the subject is interacting is a help or a hindrance. Ultimately, to uncover the structural patterns of a narrative, one must identify and classify four components of narrative structure (Greimas, 1966). The first two components define what relations exist between the subject and other narrative forces, and the second two define how those relations function in the narrative plot: (1) the degree of association among the forces that can serve as narrative subjects, (2) the spatial association between all internal and external forces involved in the subject's quest, (3) the mode of the subject and spatial associations as either pragmatic or cognitive, and (4) the tone of the subject and spatial associations as either positive or negative. The procedure for identifying these components in the letters to shareholders was a three-phase narrative analysis that proceeded as follows: The aim of Phase 1 was to identify the apparent story line and goals of the letters, the surface structure of the text. The unit of analysis was the letter in the exact sequence and form it was published. Phase 2 involved three steps to derive the narrative structure of the text:
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The italicized terms are imperfecttranslations of Greimas'sPouvoir and Savoir (Greimas, 1966).
Organizational Boundaries Figure 1. Narrativeforces and relations.

Destinator
Cognitive Relations
Help Knowing-How-to-Do
Hindrance
Subject
Positive Relations
Negative Relations
Pragmatic Relations
Help Being-Able-to-Do
Hindrance
Objct
Step 1. Topic blocks (called programs) were identified in the letters. A program is a block of narrative that is classified as having a single narrative goal, e.g., to explain capital expenditures or to explain losses. Programs represented the primary unit of analysis of this phase of the study. Step 2. Each program was characterized on the basis of the four narrative-structure components discussed above. Each of these components was classified within an oppositional framework (e.g., the narrative subject may have been presented as a single actor (CEO) or an aggregated set of actors (the entire industry); the tone may have been negative or positive). Step 3. The interactions of the four components were traced to show how they combined to achieve the program's goal (e.g., negative tone combined with a single-actor subject in describing the company's losses). The combined set of interactions in each program is called the program's oppositional structure. Phase 3 involved further combining the oppositions to derive an oppositional map for an entire letter, or the letter's deep structure. The deep structure consists of a dominant underlying value in the text and the value's logical opposites, e.g., the value of strong external boundaries and its opposites. Narrative rules govern the links between the intermediary narrative component structures found in Phase 2 and the value schema of Phase 3. The consistency with which the rules are applied reflects the extent to which underlying meanings are patterned in these letters. The analysis moves from a focus on the texts as a whole, to their smallest narrative units (the narrative forces), to successive combinations of these forces until the focus is again on the entire texts. This movement represents the core of the process of determining the meaning of a text: deconstruction of meanings as they appear in isolation and subsequent reconstruction of those meanings as they relate to others in the
system. narrative
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An overview of the three analytic phases is provided in Table 1, which outlines the major assumptions, the unit and the aim of analysis, and the procedure for deriving the three levels of textual structure. A fuller description of the method is provided below as it applies to this study's sample of texts.
Table 1 Overview of the Method Phase and level of structure 1. Surface Major assumption Intendedgoal within congruity and among letters. Multiple subgoals withina single letter. Narrative forces combine to differentially achieve subgoals. Unit of analysis Entireletteras series of words. Aim of analysis Identifyintended goals of letter.
Procedures Read, compare, and code intended narrative goals of texts in sample. Breakeach letter into programs with narrative subgoals. Tracepositions of oppositional narrative components in each program. Cross-classify positions of narrative components to arriveat combined structure. Derivecombined structure through combinationsin Step 3.
2. Narrative
Step 1: Programs. Step 2: Oppositional narrative components (subjects, environments, mode, tone). Step 3: Combined of configuration multiplenarrative components.
Identifyprograms, each with a subgoal. Identify oppositional narrative components for each program. combined Identify narrative structurefor each program.
3. Deep
Structural oppositions entire underlying lettertraceable through of configuration multiplenarrative structures.
set of Underlying oppositionsfor entire letter.
combined Identify oppositional structurefor entire letter.
Before applying a narrative analysis, the researcher must identify an appropriate deep-structure schema using two criteria: (1) The schema must be meaningful in light of the study's purpose, and (2) it must encompass the recurring oppositional structures delineated in Phase 2 of the process. This preliminary deep-structure search is a form of pretest, using texts similar to but not including the actual study sample. The researcher carries out an iterative search, involving all three analytic phases, until an appropriate, sufficiently limited, yet encompassing set of oppositions is found. Once a schema has been identified, Phases 1 and 2 are applied to each text in the chosen sample of narratives to determine the position and movements of the narrative structures along the oppositional axes of the deep-structure schema that is assumed for that group of texts. In this study, I used an iterative search process, applying Phases 1 through 3 to a number of texts that were similar to
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the sample of texts eventually used in that they were letters to shareholders of other chemical companies' annual reports. The depiction of internal and external organizational boundaries in those letters signified oppositions that met the two criteria for appropriateness: They were meaningful for the study's purpose of examining boundaries (first criterion), and they could be organized into an oppositional deep-structure schema that encompassed the recurring narrative structures in the texts (second criterion). The semiotic square, depicting this oppositional deep structure, is presented in Figure 2.
Figure 2. Semiotic square of oppositional deep-structure schema. (S) Weak External Boundaries (Si) Weak Internal Boundaries
Strong Internal Boundaries

(-Si)
Strong External Boundaries

(-S)
combiboundary andexternal 'Numberson the axes referto internal nations: boundaries 1 = Weakexternal/Strong internal 2 = Weakinternal/Strong boundaries external 3 = Weakexternal/Weak boundaries internal 4 = Strong internal boundaries external/Strong ex5 = Stronginternal/Weak internal and/orWeakexternal/Strong ternal boundaries
The dominant positive value of the system being analyzed is positioned in the upper-left corner of the square. Logical relations of implication, contrariety, and contradiction govern the positions of the other three values. In this case, relations between internal and external are relations of contrariety; relations between weak and strong are relations of contradiction. The negative of a value (its contradiction) is not identical to its contrary. For example, the square in Figure 2 assumes that the text emphasizes weak external boundaries (S) as the primary positive value. Its negation or denial (- S) implies but is not identical to its contrary (Si); similarly, the negation of the negative value (- Si) implies but is not equivalent to the positive value (S). The axes of a semiotic square are characterized by the two values they encompass. Each narrative sequence (program) of the letters to shareholders embraces one of these value combinations and may be located on an axis of the square. Thus, a program's position in the square describes the underlying values in that piece of the text. Moreover, it indicates a set of rules (discussed below) that dictate how the four narrative components may combine in each program to develop
values. set of underlying the story with that particular

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If external weak boundaries represent the dominant positive value of a text (assumed in the square in Figure 2), programs reflecting Position 1 tell their story through depicting externally weak and the logically implied internally strong boundaries. Position 2 reflects contradictions of both values of Position 1. Position 3 embraces what semiotics calls a complex set of contrary values, since they contradict the internal boundary definition implied by the dominant value in the text. Position 4 embraces what semiotics calls neutral contraries, since they contradict Position 1 only by the inclusion of the external boundary definition implied in the nondominant Position 2. Position 5 is an inherently contradictory state, indicating structures that destroy themselves. Though a narrative may (and often does) contain contradictory structures, the conflict in the narrative is untenable if the narrative consistently remains in this position (e.g., the narrative conflict for the hero of folktales cannot be established if the entire story simultaneously embraces values of love and non-love or hate and non-hate). The semiotic square may also be used dynamically, in that the logical, atemporal relations of value can generate a temporal sequence (Haidu, 1982). An entire narrative may remain consistent with a single set of values, indicating no change; it may begin with one set and end with another, indicating change; or it may be circular, where transformations lead the final state back to the beginning, indicating the loss of a potential for change (Haidu, 1982). With the internal/external boundary schema as a given deepstructure model for this study's texts, the subsequent analysis involved locating each narrative program on one of the axes of the square. The configuration of these positions in the square illustrates the dynamics of an underlying pattern of boundary definitions in the texts. It then becomes possible to differentiate texts whose structures reflect very different values of internal and external boundaries even while describing the pursuit of similar goals. SEMIOTICANALYSIS OF LETTERSTO SHAREHOLDERS A narrative semiotic analysis was performed on CEOs' letters to shareholders in ten chemical companies' annual reports of 1977-1979. Five companies had two or more domestic joint ventures and five had none. Ten firms were chosen that have similar product lines, markets, and sizes. All were heavily involved in agriculturaland industrial markets and were beginning to shift toward high technology and specialty chemical markets. Mann-Whitney U Tests indicate that the jointventuring and non-joint-venturing firms were not significantly different (at = .10) in terms of level of sales, relative capital expenditures, or relative net income. However, the ten firms were significantly different in terms of relative R&D, jointventuring firms spending relatively less on internal R&D. This supports economists' (Berg, Duncan, and Friedman, 1982) claims that domestic joint ventures in the chemical industry serve as substitutes for internal R&D. Summary economic profiles of the ten companies are presented in Table 2. Because semiotic coding relies on the researcher's assessments in applying the structural framework and coding the
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texts, tests of coding reliabilityare necessary. For this study, an independent researcher, trained in semiotics by the author but unaware of the study's propositions or the author's results, replicated the entire analysis. Of the 150 programs (3 years, 5 programs in each year's letter, for 10 companies), the semiotic positioning of only three differed from the author's own analysis. In the final compilation of the deep-structure results, no results differed from those presented here.
Table 2 Economic Profile of Companies in Sample* Company Two or more domestic joint ventures A B C D E Non-jointventuring V W X Y z Sales (Millions) R&D/Sales Capital Expenditures/Sales Profit/Sales
1489 1279 4191 1781 1235
.015 .005 .008 .02 .004
.092 .049 .082 .089 .13
.039 .07 .04 .053 .085
1211 613 2412 816 1158
.025 .008 .03 .025 .037
.148 .034 .099 .054 .095
.089 .024 .042 .043 .055
* Figures are all averages of ten years (1972-1981).
Before beginning Phase 1 of the analysis, interviews were conducted with a senior-level executive in charge of new ventures (with tenure of at least ten years) in each of the firms. The interviews served three purposes: (1) They confirmed the accuracy of published reports about the jointventure activity or inactivity of the firms; (2) they verified that no company in the sample had experienced a change in CEO or a major restructuring during a ten-year period preceding 1977, the first year of the study; and (3) they established the environmental context within which the letters were written. There was marked consensus among all informants on the perceived need in the late 1970s to show shareholders that the companies were shifting their focus from the mature industrial chemicals business to high-growth specialty chemicals. Surface Structure The surface structure of the letters consists of the words and sentences as these have been written and arranged by the authors. The letters reflect the conscious aim of the authors, as stated in the interviews, to present a positive image of the company to its stockholders. The surface structure of the two letters to be analyzed in detail, Company E (joint-venturing) and Company Z (non-joint-venturing)is presented in its entirety in the Appendix, with the program codings, or topic blocks, that were identified for the semiotic analysis.
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Narrative Structure The researcher carrying out a narrative structural analysis proceeds in three steps (Greimas, 1966): (1) identify a set of topic blocks or programs within the letters; (2) identify the narrative components of each topic block; and (3) delineate the interactions of the narrative components that will point to the underlying structural configurations that are the narrative structures. This procedure was followed in this study. Step 1. The letters were first divided into programs, each one directed toward a single implied narrative subgoal that the subject wishes to attain. The goals of the programs in the texts of these companies over the three years follow a similar pattern. The letters usually begin with a program that serves as an intertextual bridge between the previous year's letter and the current one. Usually this entails outlining the company's strengths and special growth areas (designated as Program 1). Its function in the story is to outline the subject's current knowledge and competence to achieve the final object, a positive company image. Program I is most often followed by a program giving reasons for any weaknesses or poor performance (Program 11).Its function is to establish the conflict of the story by outlining the knowledge or competence that may still be lacking. The third program discusses and the expenditures on capital assets and R&D (Program 111), fourth describes changes in management (Program IV).Their function in the story is to show the development of assets that will resolve the conflicts introduced in Program I1.Finally, the future outlook of Program V functions as the story's denouement. The programs of the 1977 letters of illustrative companies E and Z are blocked out in the Appendix. Step 2. In this step, the narrative components were identified that distinguish the programs of any narrative text (subject relations, subject/environment relations, mode, and tone) in a semiotic analysis, and their oppositional positions were located within the narrative. The results of the narrative-structure phase of the analysis are presented in Table 3. Of the ten companies of the sample, companies A-E are joint-venture active, companies V-Z are not joint-venture active. Companies Y and Z are listed twice because the structure of their letters changed between 1977 and 1979. Each company's letters are described in two rows. The "S" row describes relations among possible subjects; the "E" row describes subject/environment relations. The table lists the five programs of each letter and describes the narrative components identified for each program. The following illustration of the coding procedure applies to companies E and Z-77, which are shown in darker type in Table 3.
Subject relations.The subjects of these narratives may be depicted in varying degrees of aggregation, ranging from the CEO or any other individual member of the company to the company as a whole. The extent of unity portrayed among various possible subjects indicates the extent of inclusion of multiple levels of aggregated forces into a single narrative subject.
Subject relations in these stories were coded on the basis of the use of nouns and pronouns to depict the narrative sub286/ASQ, June 1989
Organizational Boundaries Table3 Oppositional Narrative Forces Company Joint-venturing A B C D E S E S E S E S E S E D-pNT AD-pP D-pNT A-pP D-pNT D-pNT AD-pP D-pcNT A-pcP AD-cNT A-cNT D-pNT A-pP D-pNT AD-pNT D-pcNT A-pcP AD-pcP AD-pNT A-pP D-pNT A-pP D-pNT AD-pNT AD-pNT D-pcNT A-pcN AD-pP D-pNT A-pP AD-pNT AD-pNT D-pNT AD-pNT D-pNT AD-pP D-cNT I 11 Program Ill IV V
D-pP D-pNT
Non-joint-venturing Y-79 Z-79 V W X Y-77 Z-77

Note: S
=
S E S E S E S E S E S E S E
D-cNT D-pNT AD-pP A-pP D-pNT AD-pP AD-pP AD-pNT A-cP A-pP D-pN
D-cNT A-cP D-pNT AD-pP D-pcNT D-pcN D-cNT D-cNT AD-cN D-cNT A-cNT D-cN A-cP D-cN
=
D-pcN A-pcNT D-pNT AD-pP AD-pNT D-pNT A-pcP D-pcNT AD-pP D-pNT
D-cNT
D-cNT A-cNT D-pNT D-pP
A-pP AD-pNT AD-pP A-cNT
AD-pcNT D-pcNT A-pNT D-pN A-pNT
A-pcP D-pcN
Associated; D
=
AD-pNT
AD-cNT
tive tone; P = Positive tone; NT = Neutral tone.
ciated/disassociated;p = pragmatic mode; c = cognitivemode; pc = pragmatic/cognitive mode; N = Nega-
Subject relations; E = Subject/environment relations; A
Disassociated; AD = Asso-
ject. The code assigned to each program is listed in the "S" (subject) row of each company in Table 3. Subjects were coded as either D = disassociated, AD = associated/disassociated, or A = associated. These terms are labels that identify the first of the four narrative components in each program, the degree of unity portrayed among all possible subjects of the letters. The following illustrates how the content from the text is used to render the degree of subject association for the letters of companies E and Z-77. Company E: Program I is about the state of the entire chemical industry. Areas of strength and growth are identified for the industry as a whole, which will be "cutting, fitting and sizing to the realities of the marketplace." Toward the end of the program, the CEO addresses Company E's position more specifically. Though there are some indications of a combined set of company subjects, (". . . our . .. businesses made important contributions . . ."), they are immediately followed by disassociative references to the same parties (.1. . these businesses picked up healthy momentum . . ."). This was
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coded as "D" in the subject row of Company E, Program 1. Program 11,in contrast, is short and company-oriented. Though the CEO at times appears somewhat removed from the company ("increases in costs-everywhere for everything"), there is intermittent identification between CEO and company as subjects ("Company E has been forecasting.... In our early planning"). Program 11 was thus coded "AD." Program Ill surrounds Program I. The section preceding Program 11is short and Company E-oriented; the section following Program 11is another lengthy and removed "voice of the industry." The CEO associates more with the external environment than with the company in both instances ("commitment to major growth program" and "we are seeing the elimination of expansion"), the "we" here seeming to include the entire industry. Subjects in Program Ill were thus coded as "D." Company E's 1977 letter does not discuss management changes, so Program IV is absent. Program V again depicts a distanced CEO who refers to ". . . the people of Company E . . ." and was coded "D" for subjects. Company Z-77: The subject is portrayed as an aggregated unit consisting of the CEO and the entire company in Program I ("our results"), in both parts of Program 11("our profit margins . . . our operations in North America" and "we have been unable to offset"), and in both parts of Program Ill ("we made progress" and "our problem"). The subjects in each of these three programs were therefore coded "A." In Programs IVand V, there is some ambivalence, with the CEO identifying with the company in some instances ("we moved towards our goal" and "our market and technological leadership"), yet removed from the company at other times ("the company's operations" and "the company's future prospects"). The subjects in these programs were thus coded "AD." Subject/environment relations. The question in subject/ environment relations is again the degree of association, but this time the aim is to establish the spatial domains of the narrative rather than to determine what combined unit serves as subject. Companies' letters to shareholders usually distinguish between an internal and external environment. With respect to their internal environments, CEOs usually wish letters to be unambiguous in communicating growth, profitability, and strength. External environments (including the chemical industry, the national economy, and the world) are often more ambiguously defined in relation to the company, with varying degrees of company-environment association. The subject/environment relations found in the letters were also coded on the basis of the use of nouns and pronouns, this time in depicting internal and external domains of the story. The relations noted in the letters of all ten companies are listed in the "E" (environment) rows of Table 3. They were also coded as either A = associated, AD = associated/ disassociated, or D = dissociated. The following summarizes how the degree of subject/environment association was determined for the letters of companies E and Z-77. Company E: A broad level of association between the company and the external environment is portrayed throughout the letter. References to company and industry are nearly in2881ASQ,June 1989
"we" being the voice of distinguishable in Programs I and 111, the entire industry ("As we start the new year, industry inventories . . . are near normal levels."). Subject/environment relations for Program I and Ill were thus coded "A." The external environment is not presented as a major force in any of the other programs. Company Z-77: The letter describes relations of the company with the external environment only in terms of undesirable dependence on external events that are perceived to be primarily negative. Programs 1, 11,and Ill discuss results linked directly to "weather-related problems," "economic conditions," "rise in ... costs," and "weaker demand." Subject/ environment relations for these programs were therefore coded "D." The external environment is not present in Programs IVor V. The first two components identified in each of the narrative programs indicate the existence of distinct internal and external relational differences in these two sets of letters. Semiotics seeks not only to uncover relational patterns but to make explicit the rules that bind them and determine their function in a narrative. Identification of the final two narrative components, mode and tone, makes this possible. Mode. To qualify and categorize the above relations so as to understand their function in the story, semioticians must determine what Greimas (1966) called the primary mode of each narrative program. Mode is a narrative component that qualifies the relations between narrative forces by distinguishing between those relations depicted within the narrative's action sequences and those outside the action of the plot. An action sequence is any part of the plot in which the subject executes or receives an action. Relations taking place through the plot's action sequences are said to develop the subject's beingable-to-do and are designated as pragmatic; relations that do not evolve through the plot's action are said to develop the subject's knowing-how-to-do and are designated as cognitive. For example, the relations developed in the letter may be stated as part of the action of the plot, as in "division X developed a new product." The mode is pragmatic in that it indicates a relation between narrative forces within an action sequence. The sequence develops the competence or beingable-to-do of the narrative subject in overcoming conflicts within the narrative plot. However, if the primaryfunction of a program is to develop the subject's knowing-how-to-do, the mode of that program is cognitive. These relations are not part of the plot's action sequences. For example, a statement such as "the economy is weak" signifies a state of mind of the narrative subject (not of the author). It does not involve the subject's action but is nonetheless a necessary step toward a resolution of the narrative. Narrative mode is a critical indicator of narrative structure. The patterned use of mode reflects underlying narrative rules that govern how the different sets of relations noted above may be combined to tell these companies' stories. If the narrative subject is presented as a disaggregated group of subjects, the narrative conflict can arise and be resolved through their interactions. Since these take place within action sequences
of the story, the primary mode will be pragmatic.On the

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other hand, the action sequences in a text portraying a unified set of subjects are not likely to produce narrative conflict. Any conflict in need of narrative resolution will develop outside of the actions of this unified set of forces. The primary mode in this case will be cognitive. Mode characterizations in this study's narratives were coded on the basis of the relative emphasis of each program on action (pragmatic) or state of mind (cognitive). Programs with predominantly cognitive or pragmatic statements were labeled as such (p = pragmatic and c = cognitive). When there was an intermingling of modes, the program was labeled pc = pragmatic/cognitive, as shown in Table 3. The following summarizes how the mode of relations in the letters of companies E and Z-77 was determined. Company E: Programs 1, 11,and IIIpresent an intermingling of pragmatic and cognitive modes. A phrase like ". . . lookout is cloudy" would be coded as cognitive, but the ". . . industry will be cutting, fitting . . ." would be coded as pragmatic. The first three programs in Table 3 were thus coded "pc." Program V is a cognitive ("c") reference to the importance of the company's people (". . . results will depend upon the talents . . Company Z-77: The shortest program, Program 1, is pragmatic ("p") when discussing subject relationships ("Agricultural chemicals made an important contribution . . ."). Program 11 presents cognitive relations in describing reasons for the company's current position ("c"). Program IIIcontinues to be mostly cognitive, with the striking exception of the first part of Program 111, a pragmatic textual block outlining the means of actively distancing the company from hindering forces ("pc"). Relations in Program IVare pragmatic ("p") ("we moved ... towards our goal"). The letter ends on a cognitive note ("c") ("proven capabilities . . . should give us all confidence"). Tone. The final narrative component, tone, qualifies the relations noted above among the various textual forces as either negative or positive. The narrative tone signifies the attitudinal orientations of the subjects within the various relationships. A negative tone denotes that the relation is a hindrance to the subject's quest; a positive tone denotes that the relation is a help. Tone is a critical indicator of narrative structure. The patterned use of tone, like mode, signifies the rules by which the various types of relations among textual forces may be combined to create the image that is the object in these letters. If the narrative's primary source of conflict is developed within highly associated internal and external environments, the tone by which both the internal and external relations are depicted will be predominantly positive. Depicting them in negative interrelationships would counter the ultimate object of the letters. In the other case, the primary source of narrative conflict is developed between an internal subject set and an external set of hindrances. Here, the relations developed to resolve the conflict in the narrative will be between a positively depicted set of subjects and a negatively depicted set of hindrances. Tone characterizations in this study's narratives were coded by distinguishing between positive and negative descriptions
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of both actions (pragmatic) and causal attributions of events (cognitive). Clear indications of a negative (e.g., "bad weather") or a positive (e.g., "tremendous growth") tone were labeled as such, P = positive, N = negative. The lack of a clear positive or negative tone was labeled as NT = neutral. The tone characterizations for the companies in the study are shown in Table 3. The following summarizes how tone was coded for the letters of companies E and Z-77. Company E: When referring to the narrative subjects, the tone of Programs I and IIIis mixed ("NT"); in Program 11it is primarilypositive ("P") ("enjoy increases in sales . . . good part of benefit from gains . .. cannot be converted into gains in earnings" rather than "losses due to"). When referring to the environment, the tone of Program I is positive ("P") ("U.S. demand ... a pleasant surprise"); the tone of Program IIIis negative ("N") ("costly regulatory program"). Program V is a neutral ("NT") reference to both the difficulties and the achievements of the previous year. Company Z-77: Program I is positive ("P") when discussing subject relationships ("important contribution"), but environmental relationships in the same program are depicted as negative ("N") ("weather-related problems"). In Program 11 all internal problems are expressed as outcomes of external conditions. Subject relationships were coded as positive ("P") and environment as negative ("N"). Program IIIis a continuation of the same, as the company is portrayed as actively removing itself from negative external influences. Subject relationships in Programs IVand V are depicted as neutral ("NT"). The second step of Phase 2 thus served to identify the four components in each program and to classify each component within an oppositional framework. The patterns of oppositional combinations of these components point to narrative rules that determine how the components may be meaningfully combined in this narrative system. For example, when the subjects are associated in these narratives, the mode is most often cognitive. The following is a summary of the patterns identified above. The two-way arrows indicate the predominant interactions: Associated subjects <-+cognitive mode. Disassociated subjects *-* pragmatic mode. Subject/environment association <-* external and internal positive tone. Subject/environment disassociation <-- internal positive/ external negative tone. Step 3. The final step in Phase 2 involved plotting the interactions of the four narrative components identified in these letters. The stories of the two sets of companies (A-E, Y-79, and Z-79 versus V-X, Y-77, and Z-77) use an almost entirely opposite set of interactive components to move toward the achievement of similar goals. Table 4 depicts the extent to which these stories are patterned by showing the number of companies whose letters present the narrative components in each of the two opposing forms. For example, reading down the first column, the table shows that the predominant
narrative patternfor telling of company strength (Program I) in joint-venturing firms is one of multipledisassociated subjects
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Table 4 Interactive Narrative Components* Components Joint-venturing firms Subject Subject/environment Mode Tone External Internal Non-joint-venturing firms Subject Subject/environment Mode Tone External Internal
*
Coding
II
Programs III
IV
Associated Disassociated Associated Disassociated Pragmatic Cognitive Positive Negative Positive Negative
0 5 2 0 4 0 4 0 0 0
0 3 3 0 2 1 2 0 1 0
0 3 3 0 4 0 2 1 0 0
0 2 0 0 3 0 0 0 2 0
0 4 1 0 4 0 2 0 0 0
Associated Disassociated Associated Disassociated Pragmatic Cognitive Positive Negative Positive Negative
3 0 0 2 4 1 0 1 5 0
2 2 0 5 0 4 0 3 1 1
2 0 0 4 2 0 0 1 3 0
2 0 0 0 4 1 0 0 2 0
2 0 0 2 2 1 0 1 0 0
Numbers are the number of companies whose letters reflect the component in each of the two opposing forms. The 1979 letters of companies Y and Z are not included in this table.
closely linked with their environment and relating to that environment in a positive manner within action sequences. Firms with no joint ventures also begin their stories with a discussion of company strength and growth. Theirs, however, is predominantly a narrative pattern depicting an aggregated group of subjects, shown as distinct from their environment, the positive tone relating to the internal subject group. A curious inconsistency with the structural pattern identified earlier for the whole textual system is that the mode of Program I in this second group of stories is primarilypragmatic. According to the patterns indicated earlier, conflict will not be established within the action of the plot (pragmatic mode) when the subjects involved in that action are presented as a single force. How then is the narrative conflict established in the next program, the program relating to subject failures? The answer lies in the textual transformation that occurs in Program 11(second column in Table 4). Whereas joint-venturing firms continue the narrative pattern of the previous program, firms with no joint ventures tell the story differently. Subject association and internal positive tone, both used to set the stage for the story (Program 1),are not used in Program 11.Moreover, the mode switches from pragmatic to cognitive, moving the focal relations outside of the subjects' actions. To explain the transformation occurring in Program 11in the second group of letters above requires examination of the re292/ASQ, June 1989
suits listed in Table 4 in a two-way interaction, across each row (dynamic relations across a text, referred to as syntagmatic relations) as well as down each column (static relations among possible components of a single program, referred to as paradigmatic relations). Figure 3 illustrates the sequential path of each narrative component across the five programs. The horizontal axis shows the sequence of programs; the vertical axis shows the number of firms whose letters reflect the form of narrative component depicted in the graph. The graph illustrates the extent to which the configuration of components in each program conforms to the narrative rules derived earlier. It highlights the consistency of pattern in the first group of letters and the deviations of the second group.
Figure 3. Narrative-component sequential paths.*
Joint-VenturingFirms 5 * E 4
LL 3
-0
------s.
Mode Pragmatic
_ Subject Disassociation
" \,
A
"
.'
"External
Positive Tone
E 2
~~~~~~~~'\
,.'
'
\
\
~t
/
/
/
~~~~~~~~~Subject!
_ bEnvironmental Association
1Z"
~_
111
s \
s~
IV
//
I
11 Programs
Firms Non-Joint-Venturing 5 E 4 LL 0 3 E 2 Ad
/
/
, , /
/
,
s
Subject Association
o
~Subject/
-
, \
~----\External
--
Environmental Disassociaion CognitiveMode NegativeTone
-n
II Programs
111
IV
'The graphsare based on the data in Table4. The numbersare taken directlyfromthe table when the set of letters consistentlyused one formof the narrative component.Whenbothformsof the component were present, the numberused on the graphis the differencebetween the numberof firmsusing one formand its opposite.
Figure 3 illustrates two important aspects of the use of the four narrative components across the five programs of a letter. First, the sequential paths illustrate the paradigmatic links between the numbers in each column of Table 4. The extent to which the four paths follow each other indicates interdependence of the components. For example, the parallelism in the componential structure of the first group of letters marks a strong pattern: subject disassociation, subject/environment association, pragmatic mode and externally
devices in close directed positive tone are used as narrative When a large numberof letters in and consistent interaction.
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the first group uses one of these components, a similarly large number of letters uses the others. In the second group of letters, subject/environment disassociation, external negative tone, and cognitive mode tend to follow the same pattern, whereas the subject association line moves in opposition. The four components do not appear to be equally interdependent, the deviating paths being particularlysalient in Program 11. Second, the sequential paths of Figure 3 illustrate the syntagmatic links between the numbers in each row of Table 4. The relatively high and low points of the graph indicate the salience of the given configuration of narrative components in different parts of the letters. The highest points for all four components in the first set of letters are at the beginning and end of the narratives, indicating that this particularset of narrative devices was most important at these two points for the successful development of their stories. The graph of the second group of letters shows that both the highest and lowest point is in Program 11,indicating that the set of narrative devices was both most important and most inconsistent at this point. The implications of this narrative configuration are discussed later. Narrative transformations may also occur across letters from the same company from year to year. To allow for such transformations, the present analysis was carried out over a three-year period, 1977-1979. The patterns revealed are stable (and thus were consolidated in the results shown in Table 3) across the three-year period for all but two of the companies, Company Y and the non-joint-venturing company used as an illustration in this paper, Company Z. An interesting shift occurs in the text of these two non-joint-venturing firms. The 1977 text in both cases follows the pattern of the other non-joint-venturing firms. After 1977, the pattern changes to a near turnaround, following the narrative structures of the joint-venturing firms of this sample. Figure 4 contrasts the 1977 and 1979 letters. It illustrates the consistency of narrative pattern within each year's letter and the shift that occurred over time. In both cases, this shift occurred at the time that a new CEO took over. Though it is impossible to state definitively that the change in leader caused a shift in company posture (along the dimensions examined in this study), it appears to be more than a coincidence that the eight companies with no change in leadership followed the same patterns across the three years and that the two companies whose leaders changed did not follow the same patterns. This observation provides support for the premise that the CEO plays an important role in determining the kind of story that is told in portraying a positive company image. Deep Structure In Phase 2 of the analysis the narrative structures were identified within each program in the two sets of letters. The implications of both the structural regularities and irregularities in the letters are best understood when expressed within the context of a logical oppositional structure underlying the entire set of letters. The schema used to depict these oppositions is the deep-structure schema identified earlier.
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Organizational Boundaries Figure 4. Shift of pattern of companies Y and Z.

Cognitive Mode Subject Association Joint-Venturing 1977 Firms Subject/Environmental Disassociation External Negative Tone
2 .I0
11111
IV
Programs
Subject DisassociationPragmatic Mode Non-Joint Venturing Firms 1979 Association External Positive Tone
.I-
E1
tS t S/t \ <
/
I
~ ~
II Programs
~~~X
III IV V
The graphs are based on the data in Table 4. The numbers are taken directly from the table when the set of letters consistently used one form of the narrative component. When both forms of the component were present, the number used on the graph is the difference between the number of firms using one form and its opposite.
The complete deep-structure schema or "semiotic square" (Greimas and Rastier, 1968) of a set of oppositions underlying these letters is presented in Figure 5. Also presented is a summary list of the narrative rules or conventions that dictate how narrative units may combine to generate underlying patterns. The stories of joint-venturing firms consistently follow the narrative rules that allow a simultaneous presentation of weak external boundaries and the logically implied strong internal boundaries (Position 1). There is no deviation to values on the right side of the square, indicating a rather straightforward application of the narrative rules. What happens in the other set of narratives is somewhat more interesting. The stories begin by depicting subject/ environment disassociation and subject association, narrative components signaling values of strong external and weak internal boundaries. Yet the pragmatic rather than the cognitive mode predominates. The pragmatic mode generally characterizes relations developing in a disassociated set of subjects' action sequences, whereas the subjects here are presented as a unified force. The use of the pragmatic mode suggests
the beginningof a tension between strong and weak internal

295/ASQ, June 1989
Figure 5. Deep structure of shareholder letters with corresponding narrative rules'

Weak External Boundaries (E: A-P) FIRMS JOINT-VENTURING 1 Weak Internal Boundaries (S: A-c)
Strong Internal Boundaries (S: D-p)
\ 4
Strong External Boundaries (E: D-N)
Strong External Boundaries (E: D-N)
NON-JOINT-VENTURING FIRMS 3 7
Strong Internal Boundaries (S: D-p)
Weak Internal Boundaries (S: A-c)
Weak External Boundaries (E: A-P)
Numbers on the axes refer to internaland external boundarycombinations. S = Subject relations; E = Subject/environment relations; A = Associated; D = Disassociated; p = pragmatic mode; c = cognitive mode; N = Negative tone; P = Positive tone.
definitions.ProgramI is thus located on the contraboundary dictoryaxis of Position5. is resolved in ProThis tension caused by the contradiction as the narrative structures more fullytake on the subgram 11 value of of the underlying ject disassociation characteristic strong internalboundaries.A tension between complex constructuresnow simultrariesis developed, since the narrative taneously reflect the dominantpositive value and its contrary, strong externaland internalboundaries(Position3). This position allows the narrative conflictto be established unambiguously as outside of the company's sphere of action, while acknowledgingthe internaldiscordthat would accompany such conflict by de-emphasizingsubject association and internalpositive tone. The cognitive mode and intensifiedsubpreventthe ject/environmentdisassociation in Program11 narratives from movingto Position2 of the square. Insubsequent programs,the narrativesreturntoward Position5, the disassociation remainingconsistent (exsubject/environment cept in ProgramIV,where the externalenvironmentis largely absent from the story)and the other three components causing the story to vacillatebetween values of weak and strong internalboundaries.
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The final underlying deep structure identified in the stories of the joint-venturing firms is consistently that of Position 1 in Figure 5. Moreover, this deep structure is developed through the consistent and patterned application of narrative rules. The stories of the group of firms without joint ventures, however, display underlying consistency only in embracing the dominant value of strong external boundaries. Internal boundaries are variably defined as weak or strong, thereby pointing to a contradictory deep structure identified as Position 5 in the semiotic square (with temporary movement to Position 3 in order to develop the narrative conflict). Though the underlying deep structure of this group of texts is in opposition to that of the joint-venturing group, the opposition is consistently contradictory only in terms of external boundary definitions.
DISCUSSION
The analysis moved through successive phases of breaking a set of thirty narratives into component parts, characterizing each part, and then identifying patterns in the way the parts are combined. The final analytic phase offered a map of the texts' underlying structures, their positions in the semiotic square. The results shown in the semiotic squares illustrate both the interplay of oppositional structures within a single set of narratives and the differences in the oppositional structures between the two sets. The interplay of logical structures within the set of letters of joint-venturing firms highlights the patterned simplicity underlying-a group of highly variable stories, much like the recurring patterns previously found in multiple myths and folktales (Propp, 1958; L6vi-Strauss, 1976). The interplay of structures within the letters of non-joint-venturingfirms is more complex, with logical inconsistencies underlying the narrative. The results of the analysis of oppositions between the two sets of narratives partiallysupport this study's proposition. The letters of the five joint-venturing firms consistently portray weak external and strong internal boundaries. The letters of the non-joint-venturing firms consistently portray strong external boundaries but do not portray a consistent definition of internal boundaries. There are at least two alternative means of interpreting the inconsistent logic found in the letters of the latter group. One is to maintain that the contexts of these two sets of letters are similar and that the rules governing narrative consistency apply equally to both. From this perspective, the letters of the non-joint-venturing group of firms present an inherently unstable image of the firms and their internal relations. The contradictory narrative structures relating to the strength of internal boundaries within this group of letters suggest the lack of a coherent set of shared meanings about the extent of unity or separateness of internal company units. The environmental context within which these letters were written lends support for this first interpretation. Each of the firms in the sample was heavily involved in the stagnating industrial chemicals business and felt pressure to retool and move into the more rapidlygrowing specialty chemicals markets. The specialized requirements of these new busi-
nesses suggest the need for increased autonomyand the

297/ASQ, June 1989
separateness of the internal units of a company. The underlying contradictions regarding internal boundaries of one set of letters may thus reflect the transitional instability that might accompany such a change. Future research efforts could usefully extend the comparison between the two groups of firms to determine whether, in fact, the results of this study reflect differing rates of institutionalizing change. Alternatively, the inconsistencies of the letters of non-jointventuring firms may be interpreted as suggesting that the rules that apply to narratives such as myths and folktales do not govern narratives in all contexts. According-to this perspective, the objective constraints surrounding the development of these corporate messages invalidate the narrative rules of logical consistency. Unlike myths and folktales, letters to shareholders are bound by a set of external imperatives. Even if theirs is a story of a highly unified set of narrative subjects, they are required to communicate a certain number of activities of separate units of the firm. Given this interpretation, the challenge for future research is to examine a broader array of narratives, bound by diverse external constraints, in order to ascertain the extent to which these govern the way the story is told.
CONCLUSIONS
The primary contribution of this study lies in its presentation of semiotics as a method for analyzing how signs combine in a patterned way to convey meanings within a particularcontext. Unlike more traditional forms of content analysis (e.g., Bettman and Weitz, 1983; Staw, McKechnie, and Puffer, 1983; Bowman, 1984; Salancik and Meindl, 1984), semiotics relies on an a priorivalue schema and interprets each piece of data only in light of this schema. Traditionalcontent analysis focuses on individual statements and actions, assuming that "annual report discussion, line-by-line, is a reasonable surrogate for real activity" (Bowman, 1984:64). In his study of risky behaviors of firms, for example, Bowman (1984) focused on .the variants of specific activities (extent of acquisition, litigation, and new-venture involvement of the firm), without attempting to explain the commonalities that bind these behaviors. In contrast, semiotics emphasizes the underlying values that differentiate the meaning of behaviors. The underlying oppositions defining a belief system related to risky behaviors, for instance, might be "loss," "gain," "non-loss," "non-gain." In such a study, the aim of a semiotic analysis would be to provide the framework that defines the bounds of possible behaviors within a particularcontext and to identify the rules that account for patterns in that behavior. It would not attempt to explain the multiple variations of the behaviors themselves or their performance implications. Semiotics exposes underlying oppositional values through the identification of structural invariants. As illustrated in this study, the concern is with structures embedded in a system of signs (in this case, a series of stories), rather than structures of the intentions of the sign-sender (author of the letters). The abstract concern with formal oppositions has been criticized for its attention to purely cognitive representations lacking rich descriptions of behaviors and feelings
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(Denzin, 1983; Manning, 1987) and for its inattention to the understanding brought to the message by the reader and the sender (Peirce, 1940). These criticisms are useful in defining and delimiting the potential role of semiotics in organizational research. To discover an invariant does not always mean to discover a truth. It does, however, identify problem areas for future research in systematic and differentiable terms. The links that were uncovered in this study between boundary definitions in organizational messages and newventure structures are exploratory and certainly suggestive. The value of such a study lies not in what it "proves" but in what it exposes for further exploration and questioning. Though researchers have long been intuitively aware of the probable links between organizational beliefs and strategic behavior, it has been difficult to capture the apparent complexity of these links with traditional research methods (Broms and Gahmberg, 1983). The semiotics of CEOs' letters calls attention to the simple belief patterns that may underlie the seemingly complex relationships between organizations and their environments.
REFERENCES Barley, Stephen R. 1983 "Semioticsand the study of occupational and organizational cultures."Administrative Science Quarterly, 28: 393-413. Berg, Sanford, Jerome Duncan, and Philip Friedman 1982 Joint VentureStrategies and Corporate Innovation. Cambridge,MA:Oelgeschlager, Gunn& Hain. Bettman, James R., and BartonA. Weitz 1983 "Attributions in the board room: Causalreasoningin corporateannualreports."Administrative Science Quarterly, 28: 165-183. Bowman, Edward H. 1984 "Contentanalysisof annual reportsfor corporatestrategy and risk."Interfaces,14: 61-71. Broms, Henri,and Henrik Gahmberg 1983 "Communication to self in organizationsand cultures."Administrative Science Quarterly, 28: 482-495. Denzin, Norman K. 1983 "Towards an interpretation of semiotics and history."Paper presented at the Colloquium on Criticism and Interpretive of Illinois, Theory,University Urbana-Champaign.
Miller, James C. Eco, Umberto 1979 A Theoryof Semiotics. Bloom- 1979 "The psychology of innovation in an industrial setting." In of Inington,IN: University W. G. Lawrence (ed.), ExdianaPress. ploring Individualand OrganiGreimas, Algirdas J. zational Boundaries: 205-216. Paris: 1966 Semantiquestructurale. New York: Wiley. Larousse. Miller, Eric J., and Albert K. Rice 1987 On Meaning:Selected 1967 Systems of Organization. New Writingsin SemioticTheory. York: Tavistock. of University Minneapolis: MinnesotaPress. Peirce, Charles Sanders Greimas, Algirdas J., and Frangois 1940 Selected Writings of Charles Sanders Peirce. London: HarRastier court, Brace. of semiotic 1968 "Theinteraction Yale French constraints." Propp, Vladimir Studies: Game, Play,Litera1958 Morphology of the Folktale. ture. New Haven,CT:Eastern Austin, TX: University of Texas Press. Press. Haidu, Peter Salancik, Gerald R., and James R. 1982 "Semioticsand history."SeMeindl miotica,40 (3/4): 187-228. 1984 "Corporate attributions as illuHarrigan,KathrynR. sions of management control." 1985 Strategiesfor Joint Ventures. Administrative Science Quarterly, 29: 238-254. Lexington,MA: Lexington Books. Saussure, Ferdinand de 1916 Cours de linguistique g6n6rale. Levi-Strauss,Claude vol. 1. Paris: Payot. 1963 Structural Anthropology, New York:Basic Books. Staw, Barry M., Pamela I. vol. 2. McKechnie, and Sheila M. Puffer Anthropology, 1976 Structural New York:Basic Books. 1983 "The justification of organizational performance." AdminisManning, Peter K. trative Science Quarterly, 28: 1987 Semiotics and Fieldwork. 582-600. NewburyPark,CA:Sage. Wilden, Anthony 1980 System and Structure: Essays in Communication and Exchange. New York: Tavistock.
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APPENDIX: Samples of Letters to Shareholders, with Program Codings for Surface Structure Company E (Joint-Venturing Company) 1977 Letter to Shareholders To Our Shareholders: [Program l: Implied goal: Show areas of strength and growth] [Company E] earned $108.2 million, or $6.09 per primaryshare in fiscal 1977. These earnings represent a 16.7% return on shareholders' equity and a 12.1% return on invested capital-a respectable showing in a year in which the economic environments in our major markets ranged from surprisingly strong to unexpectedly depressed. Looking back: 1977 trailed 1975 and 1976, two years of extraordinary profitability for the [R] industry. The $6.09 per share was off 38% from 1975 and 21% from 1976. Down is down, but 1977's 16.7% return on shareholders' equity is a good statement of the company's basic earnings power, and it is a fine base upon which to build. The [R] industry is still wrestling with excess capacity, but the growing into new plant is less painful than might have been expected. U.S. demand-a pleasant surprise-totalled 51 million tons, up 3% from 1976, which in turn was up 16% from 1975. The industry's [P] shipments increased an impressive 22%. While some [P] remained in the U.S. distribution system at yearend, product going on the ground increased by approximately 6%. In [H], total shipments increased 10%, with a notable 12% increase in exports. As we start the new year, industry inventories of [H] and [P] are near normal levels and sales possibilities are favorable. With energy, labor, and other variable costs on the rise, [Company E] plans to continue its policy of tight inventory control and stringent controls on extension of credit. Quite clearly, prudent money management is the key to good results in the [R] business. The outlook for [A] is cloudy. Excess capacity exists, and the industry still has some new plant under construction. Accordingly, over the next 12 to 18 months the industry will be cutting, fitting, and sizing to the realities of the marketplace. The availability of natural gas is becoming increasingly unpredictable. Shortages could markedly reduce output. For [Company E's] part, we control sufficient natural gas for our requirements, our [A] costs are highly competitive, and we are reasonably certain of sales volumes close to capacity. Prices are apt to be unsatisfactory, at least through fiscal 1978. As predicted, our chemical and industrial businesses made important contributions to fiscal 1977 operating earnings-39% of the total. Selling into markets highly influenced by general economic conditions, these businesses picked up healthy momentum in the United States as the year progressed. In Europe, important markets for [Company E] industrial products were depressed, and a change for the better is not in sight. Japanese business moved sidewise last year and is likely to do the same this year. [Program Ill: Implied goal: Justify expenditures] Capital spending totaled $175 million in fiscal 1977, the fourth year of commitment to a major growth program. As of June 30, 1977, something over 50% of the approximately $750 million invested over the past four years was not yet earning the company's objective of a 12% return on invested capital. Most of these new assets will earn up to plan in due course. The pruning of marginal assets continues, and those without potential will be sold or liquidated. [Program II: Implied goal: Show reasons for poor performance] [Company E] has been forecasting earnings at its Annual Meeting each October, and the practice will be followed again this year. In our early planning, it is clear that we have a good chance to enjoy increases in sales almost across the board. Less predictably, but almost inexorably, we will experience for everything. Increases in very large increases in costs-everywhere prices seem likely, in the short run, to cover approximately one-quarter of the anticipated increases in costs. It follows, therefore, that a good part of the benefit from gains in volume cannot be converted into gains in earnings per share in fiscal 1978.
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Organizational Boundaries [Program IIIcontinued: Implied goal: Justify expenditures] On the matter of increases in costs, it should be noted that [Company E's] environmental protection programs will total approximately $36 million in fiscal 1978. While environmental protection is the most costly of the regulatory programs from our point of view, the array of federal regulations-EPA, ERISA, OSHA, WWO, SEC, et al-is becoming increasingly formidable. Their costs have to flow through to price sooner or later. This is not the proper place to discuss the complex issues involved in governmental regulation of business activity, but it does seem necessary to voice an appeal for thoughtful consideration of costs vis-6-vis the public benefit derived. Clearly, in some areas the rules seem to be increasing the costs of products to the producers and to the consuming public unnecessarily. Also, we are seeing the elimination of expansions that might have created new activities and new jobs. The company has been seeking a [Product C] producer as a logical extension of our commitment to natural resource businesses. Accordingly, we are pleased to have acquired a [Product C] product in [the south]. This property should give us a good start in the business. We continue to think that, sooner or later, the [P] industry and the Saskatchewan government will be able to meet on common ground. The government has moved to correct some past injustices, and these conciliatory gestures, plus some recent meetings with officials, give us hope that 1978 will be a year of progress in this difficult relationship. Following past practice, this Annual Report features one of a variety of responses to corporate social responsibilities. During fiscal 1977, a major effort to improve the company's safety performance was launched. We are pleased to note that lost-time accidents were reduced by 43%. The program is described on page 10. [Program V: Implied goal: Show future outlook] Fiscal 1977 was not an easy year; 1978 starts nicely, but again, it will not be easy. As always, the results will depend upon the talents of all people-in all jobs. On behalf of the Directors and the Executive Office, it is my privilege to thank the people of [Company E] for what they have achieved and for their continuing commitment to the company goals. Company Z (Non-Joint-Venturing Company) 1977 Letter to Shareholders To the Stockholders of Company Z: [Program I: Implied goal: Show areas of strength and growth] Sales from continuing operations in 1977 were $1,123,865,000, an increase of 11 % over 1976. Net earnings were $45,624,000-down 1% from restated results for the prioryear. Agriculturalchemicals made an important contribution to our results as profitability improved following the weather-related problems of 1976. Profits for industrial chemicals also were up, reflecting the generally better economic conditions. [Program II: Implied goal: Show reasons for poor performance] Profitabilityof our [XIbusiness declined because of (1) a sharp drop in U.S. paint sales due to extremely cold weather in early 1977, (2) increased manufacturing costs for acrylate monomers in North America caused by the need to operate the older acetylene process during the proving-in period for the large new propylene-based plant, and (3) sharply reduced [XIsales in Latin America due to depressed economic conditions there. The [YM business segment was hurt by overcapacity in the acrylic sheet industry in the U.S., and this situation was aggravated by imports of acrylic sheet. Downward price pressure eroded our profit margins, and this will continue into 1978. These problems in [XIand [YIaffected our operations in North America and Latin America, and profits in these two regions were down. Increased earnings were reported by both the Pacific and European regions. [Program Ill: Implied goal: Justify expenditures] Divestiture of [PI and [Q] ProductsWe made substantial progress in 1977 towards achieving our objectives of reducing debt, strengthening the balance sheet and investing only in those businesses in which we are-or can expect to become-a primary compet-
itor.To these ends: We sold our [P1operationsin the U.S. and continuedour efforts to dispose of our [P1business in Brazil. We sold our [01 business in 301/ASQ, June 1989
the U.S. and activelypursuedleads to sell our worldwide[Q]business. We decreased our debt to equityratiofrom 81% to a far more satisfactory61% at yearend 1977. On December 29 we sold our [PIplantfor $55 million, therebycompleting the divestitureof our domestic [PIbusiness. We announcedin Octoberan increase in our provision for loss on disposalof [PIfrom$40 million to $57 million. Partof this largerprovision was due to the relatively low sale priceof the [P1plant,but the bulkof the additional writedownwas relatedto Brazil where the [PIindustryremainsdepressed. The value now assigned to these is approximately assets in Brazil $30 million. During1977 we decided to divest our [Q]businesses and to accountfor these operationsas a discontinuedbusiness segment. This decision came after an extensive review of our positionand of the long and expensive process now required to bringnew productsto the marketplace. We decided our resources could be used more efficientlyin our [RIbusinesses. We sold [sudsidiary SI in September,and the aftertaxprofiton this sale-$16,440,000-was recordedas a gain fromthe disposalof a discontinuedoperation.At yearendour other [Q]business had not yet been sold. Sale of our Brazilian [P1assets and ourworldwide[Q]business, plus internally generated cash flow, will permitfurtherdebt reductionduring1978. We expect to reachour corporatetarget of 50% debt to equityratioduringthe course of the year. Now that we have achieveda strong balancesheet, we are committedto maintaining that strengthand to furtherimprovement. [Program IV:Implied goal: Show management changes] Boardof DirectorsWe moved forwardin 1977 towards our goal of strengtheningthe boardand closely involving the outside directorsin corporatestrategyand planning. In April, WilliamL. Mobraaten, presidentof The BellTelephoneCompanyof Pennsylvania, was elected to the board.John H. McArthur, associate dean of the Harvard Business School, was elected to the boardin July. The newly-formedFinanceand StrategicPlanning Committeeof the board met regularly duringthe year to review the company'soperationsand its financialand strategicplans. [Program IIcontinued: Implied goal: Show reasons for poor performance] Outlookfor the FutureInflation has been a majorchallengefor a numberof years. Since 1973 we have been unableto offset fullythe rapidrise in raw materials,energy and other costs. This inability to maintain an adequaterelationship between price increases and cost increases has been the principal reasonfor the decline in our gross profitmarginfrom 33.8% in 1973 to 27.4% in 1977. [Program IlIl continued: Implied goal: Justify expenditures] A majorportionof our problemhas been the rapidescalationof the cost of natural gas which we use in the U.S. for feedstock and fuel purposes. In 1973, we used about 30 billioncubic feet (bcf)of natural at a gas annually cost of about $6 million.By the beginningof 1977 we had reducedour annualusage to about 20 bcf, but this amountcost almost $40 million.Further economies will reduce natural gas usage to about 12 bcf in 1978. These changes will involvesome increases in other costs, but the net savings to the companywill be about $12 million annually-starting in 1978. Ournew raw material base gives us a more stable cost structure.If our productionin the last two years had been based on our 1978 production processes, our raw material cost increases in NorthAmericawould have been 1.2% in each year instead of 5%. Althoughwe anticipateincreases in 1978 will exceed 1.2%, we expect to achieve a much better balanceof priceincreases to cost increases in the future. Inthe early 1970s we anticipated that economic growth in the middleand latterpartof the decade would be greaterthan is now likely.We based our constructionprogram on these earliergrowthestimates and, as a result,now have excess manufacturing capacity.This excess capacitypenalizescurrent earnings,but it will allow us to expand in the futureat lower than normal capitalcost. [ProgramN/:Implied goal: Show future outlook] Ourcompany is better positionedfor profitable growth than we have been for some time. The existing line of products,more stable raw material cost structureand efficient installedplantcapacitywill reinforceour marketand technologicalleadership.Ourlong-term futureis dependent upon our re302/ASQ, June 1989
Organizational Boundaries the competitiveness of the currentproductline search effort's maintaining products.Inthis reporta numberof 1977 and creatingnew proprietary to are presented.These substantiateagainour ability productintroductions recognizeand match productneeds in manydiverse marketswith product developments in variousfields of chemistry. of [Company The provencapabilities Z's] experiencedteam of scientists, engineers and other dedicatedemployees shouldgive us all confidence in the company'sfutureprospects.

A Semiotic Analysis of Corporate Language - Organizational Boundaries and Joint Venturing

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A Semiotic Analysis of Corporate Language: Organizational Boundaries and Joint Venturing Author(s): C.

A Semiotic Analysis of CorporateLanguage: Organizational Boundariesand Joint Venturing C. Marlene Fiol

? 1989 by Cornell University. 0001-8392/89/3402-0277/$1 .00.

tiallysupportedby a grantfromthe Tenneco Fund.

Organizational Boundaries Figure 1. Narrativeforces and relations.

Structural oppositions entire underlying lettertraceable through of configuration multiplenarrative structures.

set of Underlying oppositionsfor entire letter.

combined Identify oppositional structurefor entire letter.

Strong Internal Boundaries

Strong External Boundaries

values. set of underlying the story with that particular

1489 1279 4191 1781 1235

.015 .005 .008 .02 .004

.092 .049 .082 .089 .13

.039 .07 .04 .053 .085

1211 613 2412 816 1158

.025 .008 .03 .025 .037

.148 .034 .099 .054 .095

.089 .024 .042 .043 .055

* Figures are all averages of ten years (1972-1981).

Non-joint-venturing Y-79 Z-79 V W X Y-77 Z-77

D-cNT A-cNT D-pNT D-pP

A-pP AD-pNT AD-pP A-cNT

AD-pcNT D-pcNT A-pNT D-pN A-pNT

tive tone; P = Positive tone; NT = Neutral tone.

ciated/disassociated;p = pragmatic mode; c = cognitivemode; pc = pragmatic/cognitive mode; N = Nega-

Subject relations; E = Subject/environment relations; A

of the story, the primary mode will be pragmatic.On the

Environmental Disassociaion CognitiveMode NegativeTone

Organizational Boundaries Figure 4. Shift of pattern of companies Y and Z.

the beginningof a tension between strong and weak internal

Figure 5. Deep structure of shareholder letters with corresponding narrative rules'

Strong Internal Boundaries (S: D-p)

Strong External Boundaries (E: D-N)

Strong External Boundaries (E: D-N)

Strong Internal Boundaries (S: D-p)

Weak Internal Boundaries (S: A-c)

Weak External Boundaries (E: A-P)

nesses suggest the need for increased autonomyand the

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