cole des Hautes tudes Commerciales

The Evolution of Organizational Identity: A Discursive Study

par Samia Chreim Service de la direction et gestion des organisations

Thse prsente lcole des Hautes tudes Commerciales en vue de lobtention du grade de Philosophiae Doctor (Ph.D) en Administration

Juin, 2000

Samia Chreim, 2000

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Identification du jury

Prsident-rapporteur :

Alain Chanlat cole des HEC

Prsident du Comit de surveillance :

Jean-Marie Toulouse cole des HEC Nicole Giroux Universit de Montral Karen Golden-Biddle University of Alberta

Membre du jury :

Examinateur externe :

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Rsum La notion didentit organinisationnelle a suscit beaucoup dintrt dans la littrature sur les organisations ces dernires annes. Cet intrt concide avec les changements qui se passent dans les organisations et autour de celles-ci. Lidentit organisationnelle fournit une rponse la question, qui sommes nous ? Plusieurs auteurs suggrent que la rponse donne cette question indique ce qui est central, distinctif et persistant pour lorganisation (Albert et Whetten, 1985; Dutton et Dukerich, 1991; Scott et Lane, 2000). Dautres auteurs, par contre, ont indiqu que lidentit organisationnelle nest pas forcment persistante; elle peut changer avec le temps (Gioia et Thomas, 1996; Fiol, Huff et Sarason, 1996). Ces derniers auteurs numrent les changements qui se passent dans les organisations. Lors des changements, les organisations tournent leur attention vers des questions ontologiques et les rponses donnes a ces questions ne dmontrent pas toujours une compatibilit avec le passe, do la remise en question des notions de continuit et persistance dans lidentit. Cette tude vise a explorer le dveloppement de lidentit dans un contexte de changement. Les questions de recherche adoptes sont les suivantes : quels aspects de lidentit organisationnelle sont remis en question dans un contexte de changement? Est-ce que lidentit volue dans un contexte de changement ? et Comment? Quels sont les facteurs contextuels associs avec lvolution? Le cadre thorique adopt dans cette tude met laccent sur limportance du discours des dirigeants dans llaboration de lidentit organisationnelle. En prsentant lidentit aux auditoires, les dirigeants expriment et construisent lidentit de lorganisation (Scott et Lane, 2000). Comme macroacteurs (Callon et Latour, 1985), ils possdent plus de povoir que les autres groupes dintrt (stakeholders) dans la dfinition de cette identit. Ceci est surtout le cas dans un contexte de changement o les stakeholders accordent beaucoup dattention au discours des dirigeants (Schweiger et DeNisi, 1991).

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Cette recherche vise a tudier le dveloppement de lidentit organisationnelle dans le discours des dirigeants. La littrature sur lidentit organisationnelle ne fournit pas de rponses claires la question concernant la continuit ou le changement dans cette identit. Cest pourquoi nous avons choisi deffectuer une tude exploratoire qui utilise lapproche de la thorie ancre (grounded-theory approach) propose par Glaser et Strauss (1967) et Strauss et Corbin (1990). Dans cette approche, la thorie merge des donnes. Le chercheur part dune question large qui dfinit le sujet dintrt mais qui ne vise pas a tablir le lien entre une variable dpendante et une variable indpendante (Strauss et Corbin, 1990). Cette approche est pertinente pour ltude des donnes qualitatives qui sont bien les donnes tudies dans cette recherche. Ltude du discours doit tenir compte de la richesse du contexte (Hanks, 1989), et cette richesse se cerne mieux partir des donnes qualitatives (Miles and Huberman, 1994). Pour effectuer ltude du dveloppement de lidentit dans le discours, deux entreprises qui ont vcu des changements des dernires annes ont t choisies comme sujets de recherche : la Banque Royale et la Banque de Montral. Le discours identitaire de ces deux entreprises dans les rapports annuels des annes 1985 1997 (inclusivement) a t trac. Plus prcisment une tude des thmes identitaires a t effectue. Ltude suit le dveloppement des thmes dans le discours de ces entreprises, ainsi que le contexte dans lequel ce discours est nonc. Les facteurs contextuels associs avec le dveloppement de ces thmes identitaires sont alors tracs. Lanalyse des donnes dmontre quil y a des aspects de lidentit organisationnelle de ces deux entreprises qui voluent avec le temps, et dautres qui persistent. Ltude met en vidence quen general, lidentit dans le discours volue de faon incrmentale avec le temps. Dune anne lautre, on remarque des petits changements dans les thmes identitaires mais lagrgation de ces petits changements rsulte en un changement de taille. Les thmes centraux et la constellation quils forment avec les aspects diffrents de lorganisation changent avec le temps. Les aspects distinctifs qui sont mis en vidence dans le discours changent eux aussi. Ces changements sont associs avec trois facteurs : 1) les acteurs - les dirigeants - qui

influencent les traits par lesquels les entreprises sont dfinies, 2) les chagements stratgiques entrepris par les organisations, et 3) le contexte externe, notamment la faon dont lorganisation est perue par les publics externes. Dautre part, la continuit dans lidentit est maintenue dans le discours par lutilisation de mots clefs identititaires qui eux persistent mme si le sens quon vient donner ces mots-l change avec le temps. Une contribution majeure de cette tude est le fait de mettre en vidence les aspects de lidentit organisationnelle qui changent avec le temps et ceux qui demeurent. Jusqu maintenant les chercheurs taient diviss en deux coles de pense : ceux qui affirment la persitance de lidentit et ce qui affirment quelle change. Cette tude dmontre quau lieu de faire des gnralisations sur la persitance ou le changement de lidentit, il vaut mieux essayer de cerner les aspects de lidentit qui changent et ceux qui persistent avec le temps.

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TABLE OF CONTENTS

Page LIST OF TABLES LIST OF FIGURES LIST OF ABBREVIATIONS 1. INTRODUCTION 2. LITERATURE REVIEW 2.1 What is organizational identity? 2.2 Identity in organizational theory 2.2.1 Macro level organizational identity 2.2.2 Identity, social interaction, and communication 2.2.3 The role of top managers in the elaboration of identity 2.3 Centrality 2.3.1 Centrality and management discourse 2.4 Distinctiveness 2.4.1 Distinctiveness and management discourse 2.5 Temporal continuity 2.5.1 Continuity, change and management discourse 2.6 Organizational identity, strategy and culture 2.6.1 Identity and culture 2.6.2 Identity and strategy 3. RESEACH QUESTIONS, CONCEPTS AND APPROACH 3.1 Research questions 3.2 Definition of organizational identity 3.3 Top management discourse 3.3.1 Written discourse 3.3.2 Content 3.3.3 Context 3.4 Approach used 4. METHODOLOGY 4.1 Research questions and approach 4.2 The organizations 4.3 Research design 4.4 Units of analysis 4.4.1 Operationalizations of organizational identity in the literature 4.4.2 Proposed measures of organizational identity ix x xi 1 5 5 6 7 8 10 12 14 16 17 17 19 22 22 24 26 26 27 27 27 27 28 28 31 32 32 33 34 35 39

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4.5 Sources of data 4.5.1 Annual reports 4.5.2 Other organizational and industrial information 4.6 Data analysis, presentation and discussion 4.6.1 Data coding 4.6.2 Presentation, analysis and discussion 4.7 Reliability and validity 4.7.1 Reliability 4.7.2 Validity 5. DATA PRESENTATION AND ANALYSIS 5.1 Royal Bank 5.1.1 Historical overview 5.1.2 Identity themes 5.1.2.a Quality service to customers 5.1.2.b Fee-and-income generating ability 5.1.2.c Bank-financial institution 5.1.2.d Large 5.1.2.e Leader 5.2 Bank of Montreal 5.2.1 Historical overview 5.2.2 Identity themes 5.2.2.a First 5.2.2.b Oldest bank 5.2.2.c Innovative 5.2.2.d North American 5.2.2.e Commitment to stakeholders 5.2.2.f The Identity Paradox 6. DISCUSSION 6.1 Royal Bank 6.1.1 Quality service to customers 6.1.2. Fee-and-income generating ability 6.1.3 Bank-financial institution 6.1.4 Large 6.1.5 Leader 6.2 Bank of Montreal 6.2.1 First 6.2.2 North American 6.2.3 Commitment to stakeholders 6.3 General discussion 6.3.1 Shifts in distinctiveness 6.3.2 Projected, realized and unrealized identity 6.3.3 Shifts in centrality 6.3.4 Continuity and change

41 41 42 43 43 44 45 45 45 47 48 48 49 49 57 60 64 68 71 71 72 72 73 77 83 88 116 120 121 121 126 131 134 135 140 140 146 151 157 158 160 163 165

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7.CONCLUSION 7.1 Contributions 7.2 Limitations and future research directions 7.3 Conclusion 8. REFERENCES

170 170 172 173 175

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LIST OF TABLES

Page Table 1. Quality service to customers Table 2. Fee-and-income generating ability Table 3. Bank-FI Table 4. Large Table 5. Leader Table 6. First Table 7. BMOs age Table 8. Quotations from the 1991 MTS Table 9. Innovative Table 10. North American Table 11. Commitment to stakeholders Table 12. Commitment to customers Table 13. Commitment to shareholders Table 14. Commitment to employees Table 15. Commitment to the community Table 16. The identity paradox Table 17. Central themes and their constellations 50 57 60 64 68 73 74 75 77 84 89 94 101 107 113 117 129

LIST OF FIGURES

Page Figure 1. Quality service as a core theme Figure 2. Quality service developmental trajectory Figure 3. Quality service: From normative & core to instrumental & peripheral Figure 4. Fee-and-income generating ability developmental trajectory Figure 5. FI theme developmental trajectory Figure 6. Increasing complexity in identity Figure 7. Leadership as an umbrella theme Figure 8. The two meanings of the first theme Figure 9. First as an umbrella theme Figure 10. North American theme developmental trajectory Figure 11. Increasing complexity of geographic scope Figure 12. Institutionalization/Erosion/Abortion of identity attributes Figure 13. Factors that influence the evolution of organizational identity 124 125 125 128 132 133 137 140 143 149 150 162 164

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LIST OF ABBREVIATIONS

BMO: Bank of Montreal FI: Financial institution MTS: Message to shareholders RB: Royal Bank

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I would like to thank Alain Chanlat, Christiane Demers, Nicole Giroux, Ann Langley and Jean-Marie Toulouse who, at different stages of my studies, provided enormous support and constructive feedback.

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To Gary, Grace and Christina who showed unfailing patience, support and encouragement throughout my studies.

1. INTRODUCTION

Identity is a subject which evokes images of persistence and stability through time. Organizational identity is said to refer to the central, distinctive and enduring attributes of an organization (Albert and Whetten, 1985; Ashforth and Mael, 1996; Dutton and Dukerich, 1991; Scott and Lane, 2000). The notion of organizational identity as persistent can leave an observer quite perplexed. When we look around us, we see government agencies around the world resorting to privatizing services that were initially considered to be part and parcel of the public service identity. Telephone companies previously considered as utilities have come to redefine themselves as integrated communication services companies. Banks, traditionally recognized for their branches where tellers offered clients a relatively limited number of financial services, have been moving into offering comprehensive financial services through virtual banking operations. As these examples indicate, changes can lead to an erosion of the attributes by which organizations have traditionally defined themselves. Organizations in different industrial sectors are increasingly turning their attention to ontological issues and addressing questions such as "Who are we?" and "What do we want to be?" As organizations face major and rapid-paced changes deriving from globalization, deregulation, downsizing, mergers and acquisitions, technological breakthroughs and other events, they may attempt a re-elaboration of their self-definition. It is thus not surprising that interest in organizational identity has been rekindled in recent years. This interest coincides with the occurrence of major changes in organizations and their environments. These observations prompt the following question: How is the self-definition elaborated in a context of change? If we find that the re-elaboration places emphasis on past attributes, the notion of organizational identity as persistent would still hold. If, however, we find the self-definition to be built on elements which did not prevail in the past, we need to answer more questions: How different is the new identity from the past? How is the new

identity elaborated? Does it build slowly into a difference from the past? Or are the relations with the past abruptly severed? To answer these questions, one needs to study how organizational identity develops (changes or remains stable) over a longitudinal period of time. This is what this research attempts to achieve. It traces how two organizations self-definition evolved over a period of thirteen years during which major changes occurred in the organizations internal and external environments. It explores how change and continuity in identity themes in the organizations formal discourse were elaborated and how shifts in the centrality and distinctiveness of these themes occurred. Formal discourse provides rich information on the persona and attributes that an organization seeks to portray (McMillan, 1987), and therefore provides excellent information on organizational identity. Of particular relevance and significance is top managements discourse on identity. Top management is invested with authority to speak on behalf of the organization; the elaboration of identity reflects the preferences of such powerholders (Ashforth and Mael, 1996). This study thus traces the development of identity themes as revealed in top management discourse. It also reports on contextual factors that appeared to be associated with the development. It is important to understand how identity is elaborated with time. The way an organization defines what it is and what it would like to be impacts the legitimacy it can secure from its different stakeholders (Scott and Lane, 2000). As the context changes, so does the organizations self-definition, which allows legitimacy to be maintained. In addition, the self-definition affects what the organization sees as an opportunity or threat (Daft and Weick, 1984; Meyer, 1982) as well as what strategic alternatives are considered and how they are evaluated (Fox-Wolfgramm, Boal and Hunt, 1998; Carpenter, 1994). Thus, environmental jolts may be perceived as dilemmas, opportunities or aberrations (Meyer, 1982) and the strategic fit of an organizational unit may be seen as positive or negative depending largely on how the organization defines itself (Carpenter, 1994). The evolution of the self-definition also has major implications for implementation of strategy (Ashforth and Mael, 1996). Nutt (1997) proposes that top managers can facilitate

the implementation of major change in an organization by providing a compelling vision of the organization - that is, by providing a compelling projected identity. This future-oriented identity becomes the basis for actions taken at the organization. Understanding the evolution of the self-definition provides clues for understanding the development of interpretation and action at the organization. Yet we know little about how business organizations self-definition evolves with time. A few studies (for example, Czarniawska-Jorges, 1994; Czarniawska and Wolff, 1998; Gioia and Chittipeddi, 1991) have been conducted on organizational identity in a context of change, but these studies relate to non profit institutions and not business organizations. Furthermore, they did not trace the systematic evolution of identity themes over a longitudinal period of time. Systematic tracking of different identity themes should allow us to look at the components of identity, and to determine if different components develop in different ways. We can then make more accurate statements regarding the aspects of identity that change or persist with time.

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The purpose of this thesis is to explore how identity develops in a context of change in an organizations formal discourse. The research involves a longitudinal study of identity elaboration in top management discourse for two Canadian financial institutions for a period of 13 years. To explore this issue, the grounded theory approach is adopted. This thesis is organized as follows: In the next section, I will present a review of the relevant literature on organizational identity. In Section 3, I address the research questions and the central approach I use to answer these questions. Section 4 provides a discussion of the methodology used. Data and analysis are presented in Section 5. In Section 6 the findings are discussed and Section 7 concludes with the contributions and limitations of the study. Before reading on, please note that throughout the thesis I use a number of expressions - such as identity evolution, identity construction strategies used by management over time and identity elaboration in management discourse - to denote the

same phenomenon or process. As will be discussed later, top managements presentation of the organization reflects and creates identity (Barr and Huff, 1997; McMillan, 1987; Scott and Lane, 2000). Furthermore, it is of no consequence to the discussion whether or not intentional construction strategies were used by organizational authors. The fact is that some strategies were used, whether intentionally or not, and the purpose of this thesis is to uncover these strategies and not to determine the degree of intentionality that lies behind them. In addition, it should also be remarked that although the discussion often refers to how organizations speak about themselves, organizations are social constructions and abstract entities which do not, in fact, speak. Rather organizational messages are composed by human actors bestowed with the power to speak on behalf of the organization.

2. LITERATURE REVIEW

In this section, I provide an overview of the concept of organizational identity. I describe briefly the origin of the term "identity," after which I review its use in the organizational literature. I argue that identity is expressed and elaborated through discourse and communication and that top management plays a major role in this communication. This is followed by a detailed discussion of the dimensions of centrality, distinctiveness and temporal continuity which, Albert and Whetten (1985) indicate, define the aspects of identity. After I address the limitations of these dimensions, I elaborate on how each is manifested in management discourse. I argue that although identity has been conceived to be persistent, it can also evolve and this evolution is elaborated in top management discourse. This section concludes with a discussion of the differences between the concepts of identity, culture, and strategy.

2.1 WHAT IS ORGANIZATIONAL IDENTITY? Cheney (1991), following W. Mackenzie, indicates that the origin of the term "identity" can be traced to Aristotle who coined the word tautotes - identitas in Latin - to speak about sameness in different individuals. To Aristotle, brothers born of the same parents are identical with each other; they are the same thing, but in separate individuals. Mackenzie found the term to appear later in Roman and Medieval thought in connection with the Trinity. With the romantic poets, identity took on the meaning of essence - "an essential element in the continuity of personality" (Mackenzie, 1978, quoted in Cheney and Tompkins, 1987:4). By the beginning of this century, "the new meaning of 'identity' was established as primary, and the old metaphor in effect 'died'" (Cheney and Tompkins, 1987:4). Since then, identity has become a central term in the study of social life and has received attention from different thinkers. It was seen as being rooted in unconscious

processes and emotional attachments by S. Freud, as being socialized by G. Mead, and as being politicized by H. Lasswell (Cheney, 1991). Identity today, is a concept which is typically associated with the individual person (Christensen and Cheney, 1994) and which provides an answer to the question "Who am I?" (Ashforth and Mael, 1989). Like other terms that describe an individual person's activities or attributes, it has been appropriated by organizational scholars to denote particular aspects of the organization. In the same sense that we have come to speak about organizations as acting, transacting, owning, planning and communicating, we have come to see organizations as having identities. Levitt and Nass (1994) indicate that societies are anxious to assign an identity or identities to the entities they deal with, whether these entities be of an individual or a collective nature. Assignment of an identity, these authors argue, allows placement of the entity within a social category which enables prediction of behavior and definition of what constitutes legitimate conduct. Identity, however, is not only assigned by the external world. It is also an integral element of all human systems (Tannenbaum and Hanna, 1985) - including organizations which allows them to maintain a sense of self and an ontological distinction from the environment (Christensen and Cheney, 1994).

2.2 IDENTITY IN ORGANIZATIONAL THEORY Identity has been researched at the level of the individual from the perspectives of developmental psychology, psychodynamics, social psychology and symbolic

interactionism, as well as at the level of the group from different social perspectives that examine collective identity based on gender, race, ethnicity and nationality (Ashforth and Mael, 1996). Increased interest in the organizational level of analysis has been manifested during the last few years, although some earlier organizational theorists also dealt with this concept (for example, Selznick, 1957). What the identity literature offers, as Albert and Whetten (1985) indicate, is not a single concept or theory but a diverse set of ideas, modes of analysis, and propositions. In

fact, a review of the literature indicates that organizational identity has been utilized to denote two different concepts, one at a micro level and the other at a macro level. At the micro level, reference has been made to the organizational identity for the individual. For example, Ashforth and Mael (1989) indicate that the organization can provide one answer to an individual's question regarding who he or she is, and Van Maanen speaks of an individual's organizational identity in relation to a change situation. "In some cases, a shift into a new work situation may result in a dramatically altered organizational identity for the person" (1978:20).

2.2.1 Macro Level Organizational Identity At the macro level, which is the level of interest in this research, a widely accepted conceptualization of identity is provided by Albert and Whetten (1985). These two authors indicate that a statement of organizational identity provides an answer to the question "Who are we?" Identity becomes investigated when questions of information and expected utility do not provide satisfactory answers, thus leading to a discussion of goals and values. It refers to what is of centrality, distinctiveness, and temporal continuity for an organization (Albert and Whetten, 1985). Building on Albert and Whetten's conceptualization, some authors define organizational identity as a set of constructs organizational members believe to be the central, enduring, and distinctive character of their organization (Ashforth and Mael, 1996; Dutton and Dukerich, 1991; Reger, Gustafson, Demarie and Mullane, 1994; Sarason, 1995). Stoecker (1995), also placing emphasis on the members' perspective, indicates that collective identity constitutes the universe of members' frames that are often linked together. To emphasize that identity refers to the attributions made specifically by organizational members, Dutton and Dukerich distinguish it from "image" which they define as the way organizational members "believe others see the organization" (1991:520). The development of organizational identity is highly influenced by communication.

2.2.2 Identity, Social Interaction, and Communication Communication is a principal element in the formation of identity. At the level of the individual, a young person's interactions and communications with other significant individuals and groups constitute a major factor in the shaping of identity (Laing, 1971). Through communication, an individual presents or affirms self-identity and confirms or disconfirms the other's identity. By relying on communication, an individual, embedded in a broader social system, is able to articulate his/her similarity to, and distinctiveness from, this system (Christensen and Cheney, 1994). Communication plays a major role in the social construction of organizational identity as well. Communication precedes every organization since it is the foundation of agents' interactions and transactions (Hawes, 1974; Johnson, 1977; Putnam and Pacanowsky, 1983; Taylor, Cooren, Giroux and Robichaud, 1996). Basically, it is through interactions that organizational identity develops. In fact, identity is established with time, as a system (individual, group or organization) interacts with its environment (Tannenbaum and Hanna, 1985). Interactions can become patterned, giving rise to interpretations that are bracketed (Weick, 1979) and sustained. The system develops meanings and interpretations that

emerge from its attempt to assert itself and to cope with the world surrounding it. As Gray, Bougon and Donnellon indicate, "Social interactions, and communication in particular, are the primary vehicles by which coincident interpretations of reality are created, transmitted and sustained. Through communication, concepts come to embody similar meanings for two or more individuals, that is they become coincident" (1985:85). These coincident interpretations include a representation of the organization. Selznick (1957) argues that, as a result of their adaptive experiences, organizations take on a distinctive character. The distinctive and central aspects of the organization become the subject of a cognitive representation which is broadly shared by the collectivity (Dutton and Dukerich, 1991). This is the organizational identity. In other words, the notion of

organizational identity implies a convergence onto a representation of the organization. The maintenance or evolution of this representation of the organization is highly influenced by the formal discourse on the organization. In formal discourse, the organization

is presented to internal and external constituents.

In fact, for organizations, as for

individuals, communication about identity becomes a major input into identity itself. "The telling of one's own story, particularly at points when identity is challenged from the 'outside', becomes an important contributor to identity itself" (Christensen and Cheney, 1994:229). Giddens talks about individuals "forging their self-identities" (1991:2). To him, the self is a reflexive project consisting "in the sustaining of coherent, yet continuously revised, biographical narratives" (p.5). Self-identity involves a reflexive understanding by the person of his or her biography. A person's identity is to be found "in the capacity to keep a particular narrative going. The individual's biography, if she is to maintain regular interaction with others in the day-to-day world, cannot be wholly fictive. It must continually integrate events which occur in the external world, and sort them into the ongoing 'story' about the self" (Giddens, 1991:54). At the organizational level, identity is elaborated through narratives told by organizational authors (Czarniawska-Joerges, 1994). As Levitt and Nass point out, "...organizations can, to a large extent, construct their own identities. In a fragmented and atomized society, an entity has unique claims to knowledge of its previous behavior and the meanings of those behaviors...; society does not have a detailed knowledge, memory or understanding of the behaviors of each individual or organization... Furthermore, an entity's presumed superior knowledge of its own behaviors gives a priori authoritativeness to its own constructions of its history. Although the society must eventually accept the claim to identity - identity is always externally granted - the entity can have a great deal of involvement..." (1994:242). Through its formal discourse, the organization reflects and constitutes its persona or identity (McMillan, 1987). Yet claiming that an organization plays a major role in the construction of its identity through its discourse, impels us to look for the author(s) of organizational identity presentation messages. As McMillan indicates, "there is a human being behind each organizational message" (1987:42). Some individuals or groups in the organization are invested with the authority to speak on behalf of the organization or to represent it. No group is more prominently invested with this authority than the top managers of the organization. As Ashforth and Mael (1996) point out, the elaboration of organizational identity is strongly influenced by the preferences of powerholders like top management. Top managers are the macro-actors who have "authority to speak or act on

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behalf of" the other actors in the organization (Callon and Latour, 1985:279). By presenting the organization to stakeholders, these actors engage in the expression and construction of organizational identity (Scott and Lane, 2000). As I will point out below, these actors play a particularly significant role in the elaboration of identity in a context of change. 2.2.3 The Role of Top Managers in the Elaboration of Identity Numerous authors have emphasized the role of leaders in creating meaning for organizations (Barnard, 1938; Selznick, 1957; Lyles and Schwenk, 1992; Pettigrew, 1979; Pfeffer, 1981; Pondy, 1978; Smircich and Morgan, 1982). Top management can influence the cognitive representations people have of the organization through its interpretation of environmental events and organizational capabilities (Dutton and Jackson, 1987; Lyles and Schwenk, 1992) and through its translation of cues into meaning (Daft and Weick, 1984). The role of top managers in the construction of identity is particularly significant during times of change. Change constitutes a context of high ambiguity in organizations (Gioia and Chittipeddi, 1991; Schweiger and DeNisi, 1991). People who experience ambiguity often look for clues in the environment that may help them interpret the situation (Weick, 1985). As Watzlawick points out "confusion triggers off an immediate search for meaning or order to reduce the anxiety inherent in any uncertain situation" (1976:27). During organizational change, individuals and groups affected by the change attempt to reduce the experienced ambiguity and become highly attentive to communication from management (Schweiger and DeNisi, 1991). Pfeffer (1981) indicates that frequent communication by management, through informational social influence, leads to the development of a common set of understandings about the organization and the environment. These understandings, these shared meanings, provide organizational participants with a sense of belonging and identity as well as demarcating the organization from its environment and assisting in the control and commitment of those within the organization (1981:13). Communications from

management are particularly important in a context of change since stakeholders previous knowledge and understanding of the organization and its environment may no longer apply. However, top management cannot control completely the meanings which

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stakeholders will attribute to its statements of identity. Symbolic resources are subject to interpretations (Christensen and Cheney, 1994). This, nevertheless, should not divert

attention from the fact that top management can carefully choose labels and expressions that are evocative of particular desired images of the organization. Pondy (1978) indicates that when a groups experience can be put into words, the meaning of the groups action becomes a social fact. He further argues that an individual who can make sense of things and put them into language meaningful to other people is in a position to gain enormous leverage. Language is a major tool of social influence and one of the least visible of (such) influences (Pondy, 1978:91-92). Through the careful use of language, top

management may be able to influence how different stakeholders view the organization and their relationship to it. Weick argues that people who can find labels that bring order into ambiguous situations are able to direct organizational action. Labels carry their own implications for action, and that is why they are so successful in the management of ambiguity (Weick, 1985:128). People who can resolve ambiguities in an organization gain power. The values of these powerful people often affect what the organization becomes (Weick, 1985:125). As mentioned above, a situation of change in the organization is one of high ambiguity and is one where top management is looked at for explanations. In general, the socially accepted role of top management as a strategist and macro actor, as well as the ambiguity of the situation, grant particular importance to managements representation of the organizations identity. As top management is best placed to propose labels to define the situation, it can set the stage - and manage the context - for the discussion of identity. Thus, despite constraints, top management remains, in general, the more influential actor in the representation of organizational identity. Yet, despite the importance of top management discourse about the organizational identity, no study has attempted to systematically track how this identity is presented in top management discourse for a business organization. The purpose of this thesis is to explore the identity elaboration processes in a context of change through the study of top management discourse.

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Organizational literature has indicated that organizational identity is defined by a number of dimensions, some central, some expressing distinctiveness, some persistent (Albert and Whetten, 1985; Ashforth and Mael, 1996; Dutton and Dukerich, 1991; Gioia, Schultz and Corley, 2000; Sarason, 1995; Scott and Lane, 2000) and others changing over time (Gioia and Thomas, 1996; Fiol, Huff and Sarason, 1996). In what follows, I will discuss these dimensions and how they are reflected in management discourse.

2.3 CENTRALITY Tannenbaum and Hanna indicate that with time, a system develops a number of attributes which may range from the boundary of the system to its center - what the authors call "the system's core of identity" (1985:102). The peripheral attributes are minor and solitary in comparison to the core elements which are fundamental and strongly interconnected. In a similar vein, Lyles and Schwenk (1992) indicate that in organizations there are both core and peripheral "shared beliefs". The core aspects are subject to

widespread agreements and "facilitate understanding about the firm's general purpose, mission and competitors" (p.160). These core aspects are supported by peripheral ones which may not be subject to widespread consensus and which relate to subgoals. Thus, we can think of organizational attributes as being located on a continuum ranging from the central to the peripheral. Ashforth and Mael indicate that the notion of centrality implies the positioning of an attribute in a hierarchy of attributes. These two authors also draw a parallel between individual identity and organizational identity: "Research on individual identity suggests that central self-conceptions tend to be well-elaborated and densely connected, providing strong cues for cognition, behavior and affect... Similarly, organizational identity refers to the focal or core set of attributes that denote the essence of the organization... In sum, the central character refers to a self-contained cosmology, a more or less internally consistent system of pivotal beliefs, values, norms - typically anchored to the organizational mission - that informs sense-making and action. This character often reflects the needs and preferences of organizational powerholders" (Ashforth and Mael, 1996).

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As the above indicates, a central aspect of the organization is derived from its line of business. McMillan argues that the central determinant of identity in organizations is technology; "in short, we are what we do" (1987:38). In a study of a work group in a Japanese factory, Kilduff, Funk and Mihra (1997) observed how the process of producing a high tech machine was enmeshed with the construction of the group's identity. This led the authors to conclude that the technologies - utilized here in the wide sense of the word which structure time and space helped shape the collective identity; "technologies sustain the crafting of selves" (p. 591). In another vein, the notion of centrality as involving self-conceptions that are densely connected, implies a consistency between the components of identity. In his study of a social movement organization, Stoecker remarked that consistency in the frames composing identity is important. Over time, constituent groups "may emphasize, alter, or replace various subsets of frames, which may create contradictory frame subsets within the collective identity and lead to identity disputes" (1995:113). For organizational members, lack of consistency can create dissonance. Nevertheless, an organization may persist despite its possession of inconsistent, and possibly contradictory central attributes. Thus, Albert and Whetten (1985), and Whetten and Foreman (1994) talk about "hybrid organizations" or organizations with "multiple identities" in referring to institutions that reflect a mixed heritage or "multiple organizing logics". Such is the case of agricultural cooperatives and universities that demonstrate both, a normative character and a utilitarian one, which in principle, are at odds. And although most

organizations cannot be said to be hybrid or to reflect multiple identities according to the definition given above, they may nevertheless, present themselves differently depending on the context. Thus, organizations can resort to selective categorizations, highlighting

alternate attributes depending on the issue requiring an affirmation of identity (Elsbach and Kramer, 1996).

14

2.3.1 Centrality and Management Discourse Albert and Whetten (1985) point out that managers resort to a classification of the central attributes when called upon to answer the identity question, and the classification scheme evoked depends on the purpose underlying the need for a statement of identity. In Albert and Whetten's view, there may be no one best statement of identity, but multiple and equally valid statements: "We treat the problem of imprecise, possibly redundant, or even inconsistent multiple classifications at different levels of analysis not as a methodological problem to be solved, nor as a deficiency of the concept of identity, but as a description of the facts of self-classification to be examined and explained" (1985:268). Expression of different identity attributes corresponds to the enactment of different roles in diverse social scenes (Dubar, 1995). Given the multiple interests that must be heeded by the organization, it is likely that top management's presentation of the organization will vary with the aim for which a self-definitional statement is required. For example, in justifying the undertaking of an unconventional merger and acquisition, an organization's top management may evoke the aspects of identity which speak of the organization's strategic orientation, such as being an innovator or prospector. In addressing the reasons for implementing flexible workplace policies, managers may make reference to the organization being a progressive employer. Cheney (1991) argues that organizations are able to operate in different - and sometimes contradictory - domains partly because of their ability to manage rhetorically their identity. He states that different identities in organizations are associated with diverse domains of discourse or fields of argument. More importantly however, Cheney notes that organizations that produce seemingly contradictory statements of identity may reveal their core when questioned. In other words, affirming that an organization has an identity which is central to it, is not inconsistent with the notion that this organization produces different statements of identity. Here again Cheney's arguments are pertinent. In his study of the U.S. Catholic Bishops' drafting of The Challenge of Peace, a document that speaks against the expansion of nuclear weapons, he indicates that:

15

"(The bishops) struggled to speak both as moral-theological leaders and as technicalpolitical leaders without embracing the "identity" of technical-political spokespersons. As the bishops participated in both domains of discourse - using terms of the Church as well as those of secular interest groups - they were pushed and pulled by groups who wanted them either to stick to one set of terms (in the case of the political right) or work with both sets (in the case of the left). Ultimately the bishops argued in both fields but clung to their moral-theological identity when they were challenged by critics" (1991:178).

For most organizations, we are less likely to find contradictory themes in different statements of identity articulated by top management, and more likely to find variations on particular themes. Holland (1978:452), following Lichtenstein, points out that identity can be thought of as a "theme with variation". The central aspects are there, but these may be expressed or presented in various ways. In communicating with different publics, organizational authors take advantage of the equivocality inherent in words and labels to project different meanings, while at the same time maintaining the appearance of being consistent. Because of this equivocality, a key term or expression used to describe an organization - such as 'efficient' or 'socially responsible' - can be used with different connotations depending on the context. By relying on the flexibility of symbolic resources, organizations adapt the self-referential discourse to different audiences, while at the same time appearing consistent (Christensen and Cheney, 1994). In fact, top managers may intentionally refrain from providing very clear and precise statements of identity. "Precise classification may be impossible and more importantly, undesirable" (Albert and Whetten, 1985:268). This is consistent with Eisenberg's (1984) argument that engaging in strategic ambiguity in organizational communication may be a political necessity since it allows different stakeholders to apply different interpretations to the symbols used. In brief, the literature indicates that central attributes may be hierarchically ordered in alternative ways. However, the literature does not indicate how attributes can increase or

16

decrease in centrality with time and what implications such shifts have for the structure of identity. Neither does it tell us how possible shifts in central aspects are presented to stakeholders.

2.4 DISTINCTIVENESS Christensen and Cheney (1994, following Morin) state that identity is a center of knowledge about the self as separate from the environment. They view identity as an essential drive of living systems to specify a world of their own by which the boundaries between the self and the environment are delineated. "Being on the one hand open and indissolubly connected with the environment, the living system on the other hand articulates ontological separations between the self and the nonself, between sense and nonsense" (Christensen and Cheney, 1994:228). By maintaining a distinction between the self and others, the system is able to persist as a relatively autonomous entity whose relationship with the environment is confirmed through communication (Christensen, 1995). However, the inner drive to establish a distinctiveness from the surroundings is in constant interplay with forces external to the organization. While human systems may be actively involved in the management of their distinctive identities, their attempts are partly shaped by the external forces of socialization (Christensen and Cheney, 1994). In fact, organizations need to affirm their adherence to established social norms and values since this confers legitimacy upon them and helps them secure necessary resources (Meyer and Rowan, 1977). Coercive, mimetic and normative pressures in the institutional environment act as mechanisms leading to the isomorphism of organizations (DiMaggio and Powell, 1983). Furthermore, industry recipes are likely to emerge in strategic groups which are followed by organizations within a group, making them quite similar (Huff, 1982). Carpenter (1994) indicates that organizations that belong to the same sector share industry characteristics that may contribute to the content of the statement of identity. Thus, there are institutional and industrial forces that lead organizations to converge on a set of attributes. Declarations of distinctiveness are often evident in organizational stories. But here again, an organization can only draw on a limited number of categories which are available

17

to other organizations as well. As Martin, Feldman, Hatch and Sitkin (1983) argue, an organization's claim to uniqueness is paradoxically expressed through manifestations which are not unique. In their study of seven types of stories which make claims to uniqueness, they demonstrate that such stories occur in identical form in a variety of organizations. Still, the uniqueness is reinforced with the company-specific details provided, such as the names of individuals involved, what badges were worn, where the action took place and so on. What contributes to the distinctiveness of an organization is basically the unique combination of the different attributes that have been reinforced with time (Nizard, 1983). To Selznick (1957), an organization's character is the result of the historical patterning of its responsive interaction and reflects its specific experiences. A "distinct identity" evolves as an organization becomes infused with values and develops unique outlooks and habits. This identity "reflects the irreversible element in experience and choice" (Selznick, 1957:40).

2.4.1 Distinctiveness and Management Discourse Organizational literature tells us that management resorts to selective categorizations of identity attributes and comparison groups in order to maintain the organization's distinctiveness when faced with an identity threat (Elsbach and Kramer, 1996). Managers often choose to address those identity attributes, and to compare the organization with those groups, that allow it to appear distinctive. The more positively distinct identity is made to appear with reference to a comparison group, the more attractive it may seem to organizational stakeholders (Ashforth and Mael, 1989; Dutton, Dukerich and Harquail, 1994; Kramer, 1993). However, more research is needed to investigate how the distinctive aspects of identity shift with time and how management presents the erosion or building up of distinctiveness in its self-definitional discourse.

2.5 TEMPORAL CONTINUITY I had pointed out previously that organizational identity emerges from interactions which are bracketed, leading to the convergence on a collective representation of the organization. When an organization is attributed central and distinctive traits, these traits are

18

drawn on continuously in the further interactions and transactions of members. Thus, Dutton and Dukerich (1991) found out, in their study of the Port Authority, that organizational members evoke the organizational identity in making decisions and in defining the basis for their transactions within the organization and with external groups. By doing so, members perpetuate the organizational identity. A good example of the identity perpetuation process is provided by the Memorial Hospital case in Meyer's (1982) study. Memorial was a hospital that cherished self-reliance, stability and commitment to employees. When this hospital had to face an environmental jolt - namely a doctors' strike - it "absorbed the strike's impact and protected socially embedded organizational attributes by opting to deplete financial reserves rather than lay off employees" (p. 530). Memorial's actions constituted a re-affirmation of the attributes of reliance, stability, and care for employees. "The administrators' benevolence was further emulated by physicians" (p. 533) who cooperated during the strike, further reinforcing the organizational attributes. Organizational identity was evoked in making decisions regarding actions to be taken. These actions, in turn, helped reinforce the identity and perpetuate it. In other words, organizational identity, like other bracketed interpretations or meanings, can take on enduring or structural properties and thus exert influence on further interactions (Giddens, 1979; Ranson, Hinings and Greenwood, 1980) specially when these meanings emerge from past organizational successes (Miller, 1990). Tannenbaum and Hanna indicate that "as constructed or developed by a system through time, identity is defined by a number of system attributes, or fixities" (1985:101). The term "fixities" captures well the crystallization of identity attributes with the passage of time. Similarly, Gagliardi (1986) indicates that organizations' primary strategy involves the maintenance of their cultural identity, implying that identity and change are incompatible. The antithetical relationship between identity and change is clearly reflected in the expression "identity crisis". To Erikson (1968), this expression is used to denote a situation of loss of personal sameness and historical continuity. At the organizational level, firms can be said to experience an identity crisis when they have to face the prospect of a "new" identity which is not consistent with their history (Levitt and Nass, 1994).

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2.5.1 Continuity, Change and Management Discourse The above issues compel us to ask what happens to identity in a context of change. Can identity change? To start with, it should be noted that affirming that identity tends to endure does not mean that it remains static. Identity is never completely fixed. It is constantly subject to revision as the context shifts. Nevertheless, organizational identity can, and does, maintain its core content as long as the context within which it is embedded calls for no major re-evaluation. If we cast Levitt and March's (1988) argument in the terms used in the present discussion, we can say that the organizational identity can be flexible enough to allow change in operational routines without altering the core of identity itself. This is consistent with Fox-Wofgramm et al's contention that "organizations can change without necessarily changing their identities" (1998:121). These authors talk about "plasticity" in identity to refer to the fact that identity can be expanded without breaking or changing in essence. One can still question, however, how far an identity can be expanded before we can talk about a change in identity. A number of authors who have studied organizations in a context of major change have challenged the notion of temporal continuity as one of the basic dimensions of organizational identity. Gioia and Thomas (1996) - in their study of change in academic institutions - indicate that a key question is whether identity can be enduring if strategic change is to occur. A similar question is asked by Fiol et al (1996). In general, identity tends to endure despite some changes in the organization. These are incremental or first order changes (Watzlawick, Weakland and Fisch, 1974). More fundamental changes in the system, or second-order changes, are likely to entail major modifications in identity itself. We would expect such changes in identity to occur in cases of reorientations which involve discontinuous shifts in most aspects of the organization (Tushman and Romanelli, 1985) or when the organization changes from one archetype to another (Greenwood and Hinings, 1993). If we consider again the notion of "identity crisis", we will note that while it suggests the difficulty of changing, it also carries within itself allusions to a possible turning point. A

20

"loss of... sameness" also implies possibilities for change (Erikson, 1968:16). Today's organizations carry out their operations in increasingly complex environments and with increasingly sophisticated management options that offer them multiple opportunities for self-redefinition. Giddens (1979 and 1984) affirms that a fundamental element of human agency is reflexivity. Agents are capable of monitoring and adjusting their actions. Through their creativity, human actors can produce changes in established structures (Poole, Seibold, and McPhee, 1985). Reflexivity and creativity are manifested when a major change is initiated by agents in an organization. Such a change could imply a transformation in identity.

Planned major changes in organizations are undertaken by top managers (Tushman and Romanelli, 1985). As mentioned previously, top managers are the macro-actors invested with authority to speak and act on behalf of the organization (Callon and Latour, 1981). They exert a high influence on the new course for the organization, and the attributes by which it should come to be defined. When they plan major changes for the organization, top managers introduce new themes into the organizational discourse. They provide a statement of vision (Gioia and Chittipeddi, 1991) or future identity. This statement provides a projected identity for the organization. In other words, it provides a future image of the organization (Gioia and Thomas, 1996), or a future representation to be fulfilled through implementation of the proposed changes. This vision can help propel organizational action in the direction of implementation of the needed changes to achieve the vision. Since major change may threaten identity and induce resistance, most articulations of a "new" identity by top management seldom sever completely the ties with the past. In his longitudinal study of Imperial Chemical Industries, Pettigrew (1985) found that even when major changes are desired, they are often sought in a context of some continuity. Whiting indicates that "only when certain matters can be depended upon to stay in place will resources become available to modify others" (1976:197).

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A new statement of identity which diverges highly from the prevailing one has a low likelihood of penetrating the organization's cognitive filters (Reger et al, 1994). Thus, management may frame the upcoming changes so they do not seem to be widely divergent from the organizational identity. This will increase the probability that the change will be accepted (Reger et al, 1994). Pondy and Huff's (1985) study of a school shows how proper choice of language helped frame a decision to utilize computers in the educational process as ordinary and routine, thus downplaying the discontinuity with past attributes and practice. The use of computers was portrayed by the president as an extension of the shared organizational attribute of instruction in the basic skills rather than as a break with familiar ways. By presenting the change as consistent with the institution's identity, the resistance to the change that may have resulted otherwise was prevented. Thus, the organization's past was reframed so it seemed consistent with the changes desired at the organization (Levitt and Nass, 1994). However, empirical studies also tell us that changes in organizations are not always framed as being compatible with the organization's previous self-definition. For example, in her study of the U.S. Post Office Department reorganization, Biggart (1977) found that top managers, who had the mandate to effect the change, resorted to a discreditation of the attributes of the organization prior to the change. Former policies, management style, structural arrangements, logos, were all denigrated, while new arrangements and attributes and those who complied with them were praised. In this case too, the organizational history was reinterpreted so as to provide justification for the change. Ironically, however, it was reinterpreted and portrayed in a negative light. Organizational scholars have devoted considerable attention to studying changes of different types and magnitudes. However, very few studies have researched the discursive presentation of identity during these contexts. Yet, as the above discussion indicates, top management discourse about the change and its impact on identity may strongly influence how the change is perceived by organizational stakeholders and the latters acceptance of the change. More research should be devoted to understanding the identity elaboration strategies

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used by management in a context of change. Research should also address how persistence in identity is established in discourse.

-x - x -

The above constituted a review of what the literature says and does not say regarding centrality, distinctiveness and temporal continuity of identity and how these dimensions are expressed or created through top management discourse. I will move on to discuss the differences between organizational identity, culture and strategy.

2.6 ORGANIZATIONAL IDENTITY, STRATEGY AND CULTURE When the subject of organizational identity is evoked, frequently asked questions which arise revolve around the difference between identity and other concepts that may seem similar to it. Authors who have written about organizational identity often attempt to distinguish it - with more or less success - from related concepts such as organizational culture and organizational strategy. In the following, I discuss the distinctions between identity and culture as well as identity and strategy.

2.6.1 Identity and Culture Several reviews of the literature point out that there are numerous perspectives to organizational culture and each defines the concept differently (Allaire and Firsirotu, 1984; Smircich, 1983). Establishing a distinction between identity and culture depends on the definition adopted of each of these two concepts. The difference between the two has not been the subject of a consensus among organizational theorists. For example, Nizard (1983) argues that culture is a subset of identity and a powerful expression of it. Similarly, Ashforth and Mael (1996), indicate that identity is a larger concept than culture, but they do not define or discuss what they mean by culture. Albert and Whetten declare that: "What we will define as important about an organization will depend on how we characterize the organization as a whole. Consider the notion of organizational culture... Is culture part of organizational identity? The relation of culture or any

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other aspect of an organization to the concept of identity is both an empirical question (Does the organization include it among those things that are central, distinctive and enduring) and a theoretical one (Does the theoretical characterization of the organization in question predict that culture will be central, distinctive, and an enduring aspect of the organization)" (1985:265-266). However, by the same token, one can ask "Is identity part of organizational culture?", and say that the answer depends on the theoretical perspective which is taken to the notion of culture. Unlike the authors mentioned above, I personally subscribe to a definition of organizational culture which is broader than organizational identity. Like Fiol (1991), I propose that identity provides the link between two aspects of culture: one constituting a set of unobservable and unspoken rules or underlying beliefs and the other constituting of behavioral manifestations. Fiol however, argues that a)culture as

unobservable and unspoken rules and b)culture as behavioral manifestation, constitute two opposing views of organizational culture. Rather than seeing them as opposing notions, I see them as complementary and as different aspects of organizational culture. In other words, I agree with Hatch (1993) that culture involves a dynamic interaction between values, assumptions, symbols and artifacts, all of which are components of the organizational culture. Given this perspective, organizational identity constitutes a subset of culture; namely the part which speaks particularly about the organizational attributes. A similar distinction between identity and culture is made by Reitter, Chevalier, Laroche, Mendoza and Pulicani (1991). To these authors, identity and culture constitute two fundamental levels of group life. Culture includes collective practices deriving from a local knowledge which all group members must possess to function properly within the group. It also includes the system of collective symbols (pp. 24 & 274). Some cultural phenomena cannot be verbalized by actors; they may not be conscious and may be so internalized, that they strive without being expressed. Identity, on the other hand, is a coherent set of characteristics developed by the group throughout its history, and recognizable by group members (p. 21). Identity can be verbalized by group members.

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2.6.2 Identity and Strategy Strategy has been defined in numerous ways in the literature (Mintzberg, 1990; Mintzberg and Waters, 1985). Describing the nature of the relationship between strategy and identity depends largely on how these two concepts are defined. This relationship has received some interest in a number of studies. Dutton and Dukerich (1991) give an illustration of how identity can affect action and strategy in organizations. In their study of the New York Port Authority, they show that managers' view of the organizational identity affected their interpretation of, and reactions to, the issue of dealing with homeless people on the premises managed by the organization. Miles and Cameron (1982) talk about a

"corporate character" which is approximated by an organization's peculiar mix of relatively enduring features including its strategic predisposition, dominant values and beliefs in the process of critical decision-making, and a core distinctive competency. Thus, an

organization which describes itself as having an innovative strategic predisposition and which believes it has a distinctive competency in technology is likely to pursue the strategy of being the first to introduce computer-based sales and services in its industry. Ashforth and Mael (1996) clarify well the distinction between the two concepts: "Identity refers to an organization's central, distinctive, and enduring character, typically anchored to its mission, whereas strategy refers to an organization's goals and the activities intended to achieve them. Identity can serve as a wellspring for strategy, although identity and strategy are reciprocally related such that identity is enacted and expressed via strategy, and inferred, modified or affirmed from strategy. The impact that identity and strategy have on each other is also explained by Sarason (1995). Arguing from a structurational perspective (Giddens, 1984), she indicates that there is a reciprocal relationship between the two. Identity impacts strategy through the vision of managers that drives strategic behavior; and strategic behavior impacts identity, especially as participants gain a sense of the organization by observing what it does. In discussing the relationship between identity and strategy, authors usually point out to the organization's identity as viewed by top managers. Carpenter (1994), for example, explains that the decision to divest an organizational unit is related to the top management

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team's shared gestalt of the distinctive, central and enduring attributes of their organization. Both, strategy and identity are strongly influenced by top managers' worldviews.

- x - x -

In this section, I provided a review of the literature pertinent to my research subject. In the next section, I provide the research questions which guided this research and discuss the central approach I used to answer these questions.

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3. RESEARCH QUESTIONS, CONCEPTS AND APPROACH

In this section, I present the research questions that guided the study and the central approach I adopted. Thus, I present the research questions which focus on unresolved issues in the past literature on organizational identity. I then provide the definition of organizational identity which I adopt in this study and which is based on elements discussed in the literature review. As this study focuses on the evolution of organizational identity in top management discourse, I will explain where a researcher can possibly look for such discourse. I then describe how I approach the study of identity evolution in top management discourse; this involves the application of the grounded theory approach which allows for the emergence of theory from the data analyzed.

3.1 RESEARCH QUESTIONS Previously, I pointed out that authors have been in disagreement with respect to whether identity changes or tends to persist, and that this issue needs to be researched further. I also indicated that top management discourse on identity has not been systematically researched in the literature and yet, it is a major element in the expression and elaboration of organizational identity, specially in a context of change. The aim of this thesis is to explore how identity in top management discourse develops over time in a context of change. The research questions that guided the study are: What aspects of identity are addressed in a context of change in top management discourse? Do these aspects evolve, and if so, how? What contextual factors are associated with the evolution? To answer these questions, I propose the following conceptualization of organizational identity.

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3.2 DEFINITION OF ORGANIZATIONAL IDENTITY The literature indicates that organizational identity is construed through discourse whereby statements of self-definition reflect and help create identity. It also indicates that top management has a pre-dominant role in defining the organization to stakeholders. Furthermore, although some definitions of organizational identity have placed emphasis on the central, distinctive and enduring attributes of the organization, these dimensions can shift with time depending on the context. Based on these affirmations, I define organizational identity as a representation of the organization which refers to the central and distinctive attributes as well as to the enduring and shifting attributes of the organization. This representation emanates in great part from a discursive elaboration on the part of top management. Through its statements of identity, top management helps maintain or change an organizational representation, influencing stakeholders view of what the organization was, is, and will be.

3.3 TOP MANAGEMENT DISCOURSE 3.3.1 Written discourse A researcher looking for statements of identity in top management discourse, can find his/her object of interest in top managements day-to-day conversations and interactions with different individuals and/or groups. The researcher could also find the object of interest in written organizational texts. Conversations are ephemeral (Taylor and Van Every, 1993); spoken discourse has the character of a fleeting event (Ricoeur,1971:531) and is hard to retrieve post facto. Written texts, on the other hand, tend to endure. These texts can be retrieved and re-analyzed (Ricoeur, 1971; Hanks, 1989). Since the interest of this study lies in organizational identity in management discourse over an extended period of time,

reliance on written organizational texts was most appropriate.

3.3.2 Content There is a multitude of ways that a researcher can approach written texts. Because this study focuses on top managements identity-revealing discourse, emphasis was placed

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on the content of managements statements of identity. More specifically, identity themes, and their evolution constituted the subject of the study. As will be explained in detail in the methodology section, these themes are revealed in key words and expressions. Such words and expressions derive much of their meaning from the context within which they are articulated.

3.3.3 Context To be able to understand and explain the context within which discourse on identity developed, I consulted numerous organizational and industrial documents. The importance of gathering information on contextual factors to understand discourse on identity cannot be overemphasized. As Hanks indicates, it is doubtful whether any approach to discourse that posits text-works can limit itself to the textual artifact alone, without taking the next step of situating the artifact in a broader context (1989:98). Internal and external context factors have an impact on top management discourse on identity and must be taken into consideration in explaining the evolution of this discourse. I thus adopted the approach of contextualizing top management statements on organizational identity. This, in turn, led to my reliance on qualitative data. A rich contextualization of phenomena in research entails the use of qualitatively-based information (Miles and Huberman, 1994).

3.4 APPROACH USED Since this is an exploratory study and since the area of organizational identity is in an early stage of development, I adopted the grounded theory approach (Glaser and Strauss, 1967; Strauss and Corbin,1990). In fact, this approach has been extensively utilized to analyze qualitative data. Strauss and Corbin indicate that a major assumption underlying this approach is that not all the concepts pertaining to the phenomenon being studied have been identified; or if they have been identified they are conceptually underdeveloped (1990:37). Identity

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evolution in management discourse has not been systematically researched in the literature. Concepts and ideas regarding this subject are fragmented and sometimes inconsistent. Furthermore, using the grounded theory approach implies that the researcher does not start out with a narrow research question. The initial question is broad and is

progressively narrowed down during the research process as relationships between concepts are discovered. Narrowing down the question, however, does not entail statements about relationships between a dependent and an independent variable, as is common in quantitative studies because the purpose is not to test this kind of hypothesis. The research question in a grounded theory is a statement that identifies the phenomenon to be studied (Strauss and Corbin, 1990:38; bold in the original). The grounded theory approach was described by Glaser and Strauss (1967) as involving the constant comparative method of analysis whereby data is gathered and analyzed, leading to the emergence of conceptual categories. This, in turn, leads to more data gathering and analysis until categories and their properties can be integrated leading to an emerging theory. A grounded theory is one that is inductively derived from the study of the phenomenon it represents. That is, it is discovered, developed, and provisionally verified through systematic data collection and analysis of data pertaining to that phenomenon. Therefore, data collection, analysis, and theory stand in reciprocal relationship with each other. One does not begin with a theory, then prove it. Rather, one begins with an area of study and what is relevant to that area is allowed to emerge (Strauss and Corbin, 1990:23). Applying the grounded theory approach to the study of identity evolution in top management discourse entails looking for markers of identity in the content of texts. Once these markers have been identified, their development is traced for the period under study. Contextual factors associated with identity development also have to be identified and traced. The patterns that surface form the basis for a theory that emerges from the data.

- x - x -

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In this section, I provided an overview of the questions that guided the research. I also discussed the major conceptual building blocks for the study, including the definition of organizational identity I adopt and the aspects of top management discourse which become relevant in a study like the current one. I concluded by indicating that the concepts in the area of organizational identity and identity evolution are not sufficiently developed in the literature. Thus, using the grounded theory approach will allow elaborations and new concepts to emerge from the data. In the next section, I turn to the methodology employed in this research.

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4. METHODOLOGY
As I indicated before, this is an exploratory study of organizational identity. The purpose of the research is to trace the process of identity development in top management discourse in a context of change. To explore this issue, I effected a longitudinal study of managerial discourse for two Canadian chartered banks for the years 1985 to 1997 inclusively. During this period, these banks had undergone substantial changes that affected their identity. Since organizational identity as an area of study is still at an early stage of development, the concepts in this area are not well elaborated. Therefore, I used the grounded theory approach the aim of which is to generate theory from the data. I also relied on relevant recommendations provided by different authors on research methods and techniques related to studying a limited number of cases, as well as those related to qualitative data analysis. In what follows, I describe in detail the methodology used. I present again the research questions, and then discuss the cases selected, the research design, the units of analysis, the sources of data, data presentation and analysis, as well as the issues of reliability and validity.

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4.1 RESEARCH QUESTIONS AND APPROACH As mentioned in the previous section, the aim of this thesis is to explore the process of identity development in top management discourse in a context of change. The research questions that guided the study are: What aspects of identity are addressed in a context of change in top management discourse? Do these aspects evolve, and if so, how? What contextual factors are associated with the evolution? To answer these questions, I adopted the grounded theory approach the aim of which is to generate theory from the data. The data for this research was taken from two organizations that have undergone change.

4.2 THE ORGANIZATIONS Two Canadian chartered banks constitute the subject of this study: the Royal Bank (RB) and the Bank of Montreal (BMO). RB and BMO are comparable in terms of size. They ranked among the top three banks in Canada during most of the study period. However, a reading of these two banks' written documents indicates that the identity attributes they emphasize differ in several respects. RB ranked as the largest of all financial institutions in Canada in terms of revenue at the end of the study period (1997). It considers itself the leader in many respects. BMO is Canada's first bank (established in 1817) and ranked third among financial institutions in Canada at the end of the study period. BMO is the only bank which has retail banking operations in the United States and considers itself a North American bank. The following statements of corporate profile taken from the banks 1997 annual reports (the last year of the study period) illustrate concisely the aspects of identity that these banks emphasize: Royal Bank Royal Bank is Canadas largest financial institution as measured by market capitalization, revenues and net income. We have leading positions in most Canadian financial services markets and operations in 36 countries In Canada, Internationally Bank of Montreal Bank of Montreal, Canadas first bank, is a highly diversified financial services institution offering a full range of services in all three NAFTA countries. These are the companies that serve you:.

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Although the choice of these two financial institutions can be justified on a number of theoretical grounds, the factor that played a major role in my choice is the fact that, of the Big Five chartered Canadian banks, RB and BMO are the only ones which have their Archives department in Montreal. For a previous study I had undertaken, I had made numerous attempts to obtain documents from the other members of the group of Big Five Canadian chartered banks. However, as their Archives and Public Relations departments are situated in Toronto, obtaining these documents was difficult indeed. From a theoretical standpoint, choice of these two chartered banks as study cases is justified by the fact that they have different histories and, as the corporate profile indicates, define themselves by different attributes, although they operate in the same industry, and are of comparable size. In addition, these institutions have dealt with a number of significant changes during the last decade. Changes deriving from de-regulation, globalization,

increasing competition, technological advancements, international economic developments, and customer expectations, have left the financial industry landscape substantially modified if we compare it today with the mid-eighties. Both financial institutions in the study have undertaken numerous restructurings, made a number of acquisitions in related but then nonbanking areas, and substantially upgraded the services they provide during the last thirteen years. All these changes have had a major impact on the institutions in question and in the way they are defined by management. They therefore constitute interesting cases to study. The process of identity evolution for these two organizations was studied for a period of thirteen years, from January 1985 to December 1997. In 1987, major regulatory change occurred relating to the banking sector in Canada and this had a major impact on the identity of the organizations under study. By considering 1985 as the beginning of the study period, I was able to see how the organizations defined themselves before these major changes occurred and the impact that these changes have had on the evolution of identity.

4.3 RESEARCH DESIGN The research involved the study of two organizations. Following Eisenhardts (1989) recommendations, I analyze and discuss identity development for each of the two

34

organizations separately. The idea is to become intimately familiar with each organization and its unique patterns before trying to generalize. This intraorganizational analysis is followed by an interorganizational analysis whereby the findings for the two banks are contrasted. Similarities and differences are discussed and some general conclusions are made.

4.4 UNITS OF ANALYSIS Studying organizational identity empirically depends on how the concept is defined. To date, most articles on organizational identity have been of a conceptual nature. In the few empirical articles on this subject, different operationalizations have been adopted. In what follows, I review different operationalizations of organizational identity and propose an operationalization which is discourse-based.

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4.4.1 Operationalizations of Organizational Identity in the Literature Of the different studies that research some aspect of organizational identity, one employed a survey. In a cross-sectional study, Gioia and Thomas (1996) tested the

proposition that strategy and information processing structure are related to organizational identity. In their survey of academic institutions, they measured two aspects of identity, identity type and strength of identity. Identity type referred to whether the top management team saw the institution as more utilitarian or more normative. It was measured on a seven point Likert scale through questions such as "To what extent do top administrators feel your institution should not be competing for students as if they were clients or customers?" (p. 401). Identity strength referred to the extent to which members held the values and identity of their institution. It was also measured on a 7-point Likert scale through questions like "To what extent do the top management team members of your institution have a strong sense of the institution's history?" (p.401). It should be noted that the authors' major aim was not to undertake an in-depth study of identity per se, but to test how different aspects of strategy and structure were related to it. Dutton and Dukerich used a different approach to study identity. In their study of the New York Port authority, they measured it by asking informants about their views regarding the characteristics that distinguished their organization. They found that there were six attributes that summarized the informants' views: "First, 100 percent of our informants called the Port Authority a professional organization with a uniquely technical expertise, ill-suited to social service activities. Second, informants (44%) referred to their organization as ethical, scandal-free, and altruistic. Third, 36 percent described it as a first-class, high quality organization and a provider of superior service. Fourth,... Finally, a fourth of our informants expressed a view of their organization as distinctive in terms of being a fixer, a 'can-do' organization" (1991:526-7). One can argue that there are two caveats in the above operationalization. First, as the list of characteristics goes on, we can see that there are smaller percentages of informants who endorse the attributes. Should an attribute mentioned by 25 percent of respondents be considered an aspect of organizational identity? Walsh (1995) questions whether an aggregation of individual knowledge structures can be taken to represent the collective

36

knowledge structure. These issues are not addressed by Dutton and Dukerich. Second, the above characteristics attributed by organizational participants were relevant to a particular problematic issue salient at the time - that of homeless people on the premises managed by the Port Authority. It is possible that a different set of attributes would have surfaced if organizational participants were questioned about their perceptions of the organization with regard to another issue, such as a major expansion project, for example. Fiol et al (1996) propose that instead of placing emphasis on the central, distinctive and enduring aspects of organizational identity, researchers focus on "the more general question that helps form the glue that holds organizations together. This more general question is how stakeholders address the question, "Who are we?". "By framing identity as the address of the ongoing question "Who are we?", we are trying to capture the continuous reflection involved in identification. We want to emphasize that identity is not something that is just given - it is something routinely created and sustained through reflection and the testing of evolving ideas of identity." In their paper, Fiol et al report on their study of the Baby Bells or regional Bell operating companies (RBOCs) in the United States. They indicate that two questions proved effective in investigating the evolution of organizational identity: "1)If you were to use adjectives to describe your company in comparison to the other RBOCs, what words you use? (and) 2) If you were to use adjectives to describe your company in comparison to competition, what words you use?" These questions were presented to eighteen senior executives of one RBOC. Common themes that emerged from the responses were analyzed and used to develop items for use in a questionnaire. The questionnaire items measured, on a 5 point Likert scale, the degree of aggressiveness, strategic focus, customer focus, tolerance for risk, bureaucracy, cost structure, speed of moving and constraint for each organization in their study. It is clear that the identity dimensions that were studied relate to the strategic orientation of the organizations. In fact, the object of their research revolves around the interrelation between organizational strategy and identity. It should be mentioned, however, that the questions asked and the questionnaire items mentioned above do not gauge the evolution of identity.

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These questions are most likely to capture identity as a product and not as a process. In fact, the authors relied on different sources of data to track the changes in identity and strategy with time. A process approach to identity is adopted by Stoecker (1995) in his study of a social movement organization. More specifically, he indicates that the identity of a social movement organization is constructed from frames elaborated at different structural levels including the community, the movement, and the social movement organization level. He analyzes the frames elaborated at these levels at different time periods. He concludes that different frames can converge or diverge, thus affecting the movement's identity and actions. Czarniawska-Joerges (1994) also adopts a process approach in her post-modernist study of the Swedish public sector organizations. She views identity as a narrative "or, more properly, identity construction as a continuous process of narration" (p.198); the appropriate analogy is one "between organizational narratives and autobiographies as narratives constituting identity" (p. 200). She thus shows how the public sector - and the consultants working for it - narrate identity using labels and concepts from the private sector, and re-cast the past so it remains consistent with the present image which the public sector attempts to legitimate. She looks for the different authors of the narrative, analyzes the labels used and their sources, and examines the rhetoric used by the public sector in the presentation of identity. She takes a broad process view of identity which allows her to analyze the multiple factors that impact identity, and to portray how identity is narrated with time. Viewing identity as a set of stable criteria anchored to the past is said to be particularly limiting, especially in studies of organizational change (Gioia and Thomas, 1996; Fiol et al, 1996; Stoecker, 1995). To overcome this limitation, Gioia and Thomas (1996) suggested that researchers focus on the vision of top managers, or what they call "the projected image of the organization" as a substitute to institutional identity in studies of change. The identity of an organization can also be inferred from a variety of written organizational documents. Thus, Elsbach and Kramer, in an attempt to get a reliable definition of a number of universities' enduring identity dimensions, searched

38

organizational records - namely university catalogs for five years - for statements regarding the unique and defining characteristics: "We focused on statements... that roughly fit the prototypes: "our school is an X type of school", "our school is different from most schools on dimension X", "a central dimension of our school is X", or "we have always been a type X school" (1996:451). They list the identity dimensions that surfaced from their investigation for each of the schools (p.453). A reading of these dimensions indicates that they include the following: type of culture (e.g. "participatory culture"; "small/friendly culture"), values (e.g. "academic values"; "work ethic"), type or quality of students (e.g. "diverse students"; "elite students"), type of program (e.g. "global program"; "quantitative program"), type of institution (e.g. "public institution"), approach (e.g. "entrepreneurial"; "technical"), and a variety of other attributes including "renowned university" and "strong alumni". As can be noted, the above attributes address a variety of organizational domains and is consistent with a relatively broad view of identity. As the above indicates, there is no single approach to operationalizing organizational identity. The operationalizations are as varied as the objectives of the studies and the methodological perspectives taken.

39

4.4.2 Proposed Measures of Organizational Identity The approach used by Elsbach and Kramer (1996) which involves analyzing written documents for statements of identity seems particularly pertinent for my study. As I mentioned previously in my discussion, I will be relying on formal written texts to study what identity themes emerge and how these themes are elaborated with time. Huff indicates that "the use of the same word and its synonyms is called a theme" (1983:169). I propose that an identity theme is revealed by a word or an expression - a label - which is selfreferential and which is talked about as being central, distinctive and/or enduring. Relaxing the requirement that a theme be considered identitarian (identitaire) only if it is enduring, allows the researcher to study how identity changes. It also allows the tracing of those themes that increase in centrality and/or distinctiveness with time. Distinctiveness was gauged by such qualifiers as "best" and "highest": references to the banks superior ranking on some attribute within a comparison group. Temporal

continuity (or lack of it) was gauged by references to time, such as the past, present and future. Evidence of continuity is also provided by the continual appearance of the theme over the years. Centrality was gauged by such terms as "at the heart of our mission", "basic reason for everything we do". Another measure of centrality is the number of references that are made to a particular theme. The frequency with which an item is mentioned is a measure of importance (D'Aveni and MacMillan, 1990). Evidence of centrality was also provided by the number of issues revolving around the theme. The following paragraph from the Royal Bank 1985 message to shareholders (MTSs) is an example: "Serving customers well remains at the heart of the Royal Bank's mission. It is the basic reason for everything else we do. Traditionally, attention to customer needs, the 'personal touch', has been a strong point at the Royal. It remains a constant. All our efforts to preserve the Bank's financial soundness, manage costs, improve productivity, devise and introduce new products, new service-delivery methods and new technologies - as well as to make continuing investments in staff training - all are ultimately aimed at one primary goal: serving customers' needs well" (italics in the original). Serving customers' needs well is an attribute that appears in this and other annual reports. From the above paragraph it can be seen that this is an attribute which is considered

40

central ("basic reason for everything else we do"), distinctive ("a strong point") and enduring ("traditionally" and "it remains a constant"). Particular attention was paid to variations on a given theme. For example, at the RB, such terms as customer service, quality service, meeting customer needs seem to be used interchangeably to denote particular aspects of the bank-customer relationship. Instead of using the labels that were used by the banks - which changed from year to year and sometimes within the same year - and to avoid making the discussion confusing, I used the same theme title in all discussions and elaborated on how the labels changed. For example, all references to how the bank served customers were discussed under the title quality service to customers which was considered an identity theme. Another example can be provided from BMOs identitarian discourse. BMO calls itself initially a Canadian bank, then a North American bank and later still a NAFTA bank in referring to its geographic scope that evolved with time. I used throughout my discussion the expression North American to refer to the geographic scope theme since this is the label that dominates throughout the study years. It should also be noted that although I used a single label or expression to speak about what I call a theme, neither the labels, nor their meanings remain fixed over the years. Furthermore, because my interest is in the elaboration of identity over time, projected identity attributes also constitute themes of interest. As Pettigrew (1990) indicates, studying process requires looking at the past, present, and future. Projected identity

attributes are revealed as major objectives or parts of a vision. Indicators of projected attributes used were such expressions as "Our major objective is", and "Our vision is to become" It should also be mentioned that written documents by organizations may contain varied and numerous self-references. To avoid death by data asphyxiation (Pettigrew, 1990), I emphasized, for example, five of the RB themes that were most frequently recurring and/or that did not occur frequently at the beginning of the period, but became frequent and central later on (or vice versa). For example, the fee-and-income generating ability theme for RB and the innovative theme for BMO do not occur frequently in the MTS within the first few

41

years of the study. They do become more central towards the end of the study period. These themes were tracked and analyzed. Furthermore, some themes like retail banking operations for RB appear as distinctive in size and this issue recurs in the MTS. However, since size is a theme that was traced for RB and it subsumes in part the retail banking operations, the latter theme was not discussed separately. This limitation of the study, however, is a minor one since the purpose of the study is not to provide a full account of all attributes that constitute the banks identity. Rather the study aims at discerning identity construction strategies used by the organizations over time. The themes that were tracked for the two organizations provide ample evidence of such strategies. As McMillan indicates: Realizing the impossibility of overturning every rock and stone within the organization, we hope instead for a picture which might resemble an old jigsaw puzzle that we drag out of the attic on a rainy day. Several pieces are missing, but at least we know at the end of our labors whether we have a ship or a puppy (1987:23).

4.5 SOURCES OF DATA Mintzberg and McHugh (1985) state that the best method for tracking strategies is to reconstruct them after the fact. Reconstruction after the fact applies to identity elaboration strategies in top management discourse as well. As mentioned in the preceding chapter, written texts tend to endure and therefore provide excellent information for tracing the development of identity. One such written text is the annual report.

4.5.1 Annual Reports A variety of written texts appearing in the annual report are used as the major source of data in this study. Statements of corporate profile, vision, values, and/or history as well as letters to shareholders all of which can be found in annual reports provide a wealth of information on top managements representation of the organization. Because these texts are produced annually, they allow the researcher to trace the process of identity development.

42

Numerous researchers who have done longitudinal studies have relied on annual reports as the single or the major source of data (for e.g. Barr and Huff, 1997; Bettman and Weitz, 1983; DAveni and MacMillan, 1990; Salancik and Meindl, 1984; Staw, Mckechnie and Puffer, 1983). An organization's central attributes, its significant undertakings and changes during the year, its major future objectives, and the external factors that are heeded by management are most often addressed in the message to shareholders. "Letters to shareholders are particularly good indicators of the major topics that organizational managers attend to" (D'Aveni and Macmillan, 1990:640). Since the messages to shareholders are produced annually, they constitute a reliable source of information on the evolution of the organization's identity in top management discourse. In fact, because they are signed by the top manager(s) of the organization, they provide an excellent information base from which to infer management's identity construction strategies. Although the first draft of the letter to shareholders is prepared by public relations writers, it has to be read and approved by different top officials (Staw et al, 1983); what is written in the letter to shareholders is thus taken to be top management's account (Salancik and Meindl, 1984). In addition to the message to shareholders, some annual reports give a brief overview of the organization's corporate profile, vision, values, and/or history. I consider these to be major sources of data as well. These written documents were analyzed for a period of thirteen years, from January 1985 to December 1997.

4.5.2 Other Organizational and Industrial Information To understand and explain the context within which identity-construction discourse developed, I consulted other organizational and industrial documents. Organizational

documents included the review of operations and other segments of the annual report, as well as the house organ for the period under study. The house organs provided a wealth of information. House organs constitute part of the organizational public statements which disseminate the organization's history and values and which call forth a "significant past" and provide "the symbolic impetus to propel the organization into the future" (McMillan,

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1987:37). In addition, five interviews per bank were conducted with middle or senior managers. The information gathered from these interviews was also used as a source of contextual information. Industrial information was taken mainly from the business press.

4.6 DATA ANALYSIS, PRESENTATION AND DISCUSSION Different approaches to the analysis of qualitative data are available. The overriding approach I used is the grounded theory approach which I described previously. It involves a process of travelling back and forth between the data and the emerging theory (Elsbach, 1994). I also relied on recommendations provided by different researchers who have subscribed to qualitative methods.

4.6.1 Data Coding The major units of analysis that were coded are the references to identity themes (and related issues) in the primary sources of data. The operating review in the annual report, other organizational documents, the interviews with organizational informants and industry information were carefully read and searched for information that could confirm or disconfirm the emerging patterns in the analysis. These documents and interviews were also used as a source of information on contextual variables. In my initial coding of the primary sources, I attempted to stay very close to the data and to use codes derived from the terms utilized in these sources. For example, in coding the BMO data, I initially had the following codes: Canada, U.S., North America, Mexico, NAFTA. These are first-order codes that remain very close to the terms utilized by the source of data (Gioia, Thomas, Clark and Chittipeddi, 1994). Later these codes were aggregated into a single code, geographic scope, which is a more conceptual category or second-order code (Gioia et al, 1994). In fact, the constant comparative method prescribed by the grounded theory approach involves not only "comparing incidents applicable to each category", but also "integrating categories and their properties" (Glaser and Strauss, 1967:105).

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I had started by coding the data for RB. Later when I attempted to code the data for BMO using the coding scheme developed for RB, I found that the codes had to be reelaborated. For example, in contrast to RB, BMO consistently presents paradoxical aspects of identity which are thereafter demystified. Additional codes (such as paradox) were added to the coding scheme to take account of these issues. The final coding scheme that emerged was used to recode all the documents. Recoding documents using the final coding scheme strengthens the reliability of the study (Huff, 1990). The process of coding was facilitated by the use of the ATLAS ti Software for Visual and Qualitative Data Analysis (Version 4.1). It allows the researcher to code quotations of different sizes, change code names, group codes, retrieve quotations under a given code, and search for words or expressions with relative ease.

4.6.2 Presentation, Analysis and Discussion For some of the themes studied, a large number of quotations were generated. Instead of presenting all those quotations -which would have increased substantially the volume of the thesis and again would lead to death by data asphyxiation - I report those quotations that are representative of a significant state in the themes trajectory. For example, for RB, there are 31 quotations coded with leader in the MTSs alone. Only a portion of these quotations are presented in the thesis. Following the recommendations of Miles and Huberman (1994), I present the data for each theme in tables arranged according to chronological order. This is followed by a narrative description (Langley, 1996) of the themes evolution. Thus the developmental trajectory (Kimberly and Bouchikhi, 1995) for each theme was presented. The evolution

of some of the themes lent itself to presentation along tracks (Van de Ven, 1992). Tracks were used to briefly show the progression of the theme along with the contextual factors associated with the evolution. Following Eisenhardtss (1989) recommendations, a discussion is provided for each bank which is followed by a general discussion addressing the similarities and differences between the two banks. A number of general conclusions are provided. The conceptual

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insights that emerged from the study are discussed. Some of the concepts that emerged are consistent with the literature. Others seem to diverge from extant literature and provide avenues for extending existing concepts.

4.7 RELIABILITY AND VALIDITY The evaluation of any research project is based, in part, on the assessment of the reliability and the validity of the research.

4.7.1 Reliability Reliability is a measure of consistency across time and across researchers (Miles and Huberman, 1990). "A reliable procedure should yield the same results from the same set of phenomena regardless of the circumstances of application" (Krippendorff, 1980:129). To strengthen the reliability of the study, I applied a number of measures. I used the final coding scheme to recode all documents. This implies that the same codes and categories were applied to the data from the two organizations. In addition, since the documents analyzed are public and are referenced in the thesis, they are available for consultation to other researchers. Furthermore, substantial chunks of raw data in the form of quotes are provided throughout the analysis. By making explicit what research methods and analytical techniques were used, as well as what documents and data were analyzed, I allow other researchers to track the process by which I arrived at my results. These steps help strengthen the reliability of the study.

4.7.2 Validity Two main types of validity are given attention to by qualitative researchers: internal validity and external validity. Internal validity relates to "truth value"; to whether the findings of the study make sense; to whether they are credible to the people studied and readers; and to whether they are "an authentic portrait of what we were looking at" (Miles and Huberman, 1990:278). Strauss and Corbin tell researchers that referencing literature in

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appropriate places gives validation of the accuracy of the findings. "Or you might want to point out how yours differs from the literature and why" (Strauss and Corbin, 1990:52). This is a strategy I used throughout. External validity, on the other hand, refers to the generalizability of the study; to its "transferability" to other contexts (Miles and Huberman, 1994). Generalizability is a major limitation of research which relies on a small number of organizations (Eisenhardt, 1989). Nevertheless, since I have provided extensive information about the sample, the process and the context, comparison with other samples, processes and contexts may be undertaken by other researchers (Miles and Huberman, 1994).

x - x -

In this section, I discussed the methods used in the study. I now turn to the data presentation and analysis.

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5. DATA PRESENTATION AND ANALYSIS

This section has two sub-sections, one for RB and the other for BMO. Each of these two sub-sections opens with a brief overview of the banks history. This is followed by data presentation and analysis. The data for each theme is presented in a table organized by chronological order. Quotations in the tables are taken from the annual report and are presented verbatim. Each quotation is preceded by a - sign. Data presentation for each theme is followed by a narrative description and analysis of the theme whereby its evolution over the years is described and contextual factors that are associated with the theme are presented. It must be noted that the order in which the themes are presented for both banks is of no particular significance.

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5.1 ROYAL BANK

5.1.1 HISTORICAL OVERVIEW (Source: Interest Magazine, September/Oct 1993, and www.royalbank.com/history) Royal Bank started off in 1864 as the Merchants Bank, founded by a close-knit group of merchants as a private enterprise in Halifax. In 1869, the bank obtained a federal charter and the name was changed to the Merchants Bank of Halifax. During its early existence the bank pursued a strategy of national development as it opened branches across different areas of the country. In 1901, its name was changed to The Royal Bank of Canada, Montreal. The late nineteenth century and early twentieth century saw the bank expand into international locations including south, central and North America, as well as Europe. Between the years 1910 and 1925, Royal Bank grew by opening new branches and largely through the acquisition of five major banks in Canada. In 1920, Royal Bank became Canadas largest bank in terms of assets. From 1941 until very recently it consistently maintained this ranking (Interest Magazine, Sept/Oct 1993, p.23). Starting in the late 1980s, the four pillars in the financial industry sector in Canada started to crumble. Since then the bank has made several acquisitions, the most notable of which are Dominion Securities, Royal Trust, and Voyageur Insurance. In 1998, the bank had total assets of $274,399 million, 1,400 branches in Canada and an international network of 106 offices in 35 countries around the world (Annual Report, 1998). The period under study saw the succession of three executives to the top positions of chairman of the board, CEO, president and/or COO. Thus, the MTS, the main source of data for this study was signed by the following executives: and in 1907, the head office was moved from Halifax to

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1985: 1986-1989: 1990-1994: 1995-1997:

R.C. Frazee (Chairman and CEO) and Allan Taylor (President and COO) Allan Taylor (Chairman and CEO) Allan Taylor (Chairman and CEO) and John Cleghorn (President and COO) John Cleghorn (Chairman and CEO).

Remark that the RB data does not reveal significant differences between the documents signed by different executives.

5.1.2 IDENTITY THEMES In the Methodology section, I described how identity themes were chosen for analysis. Here are the themes presented and analyzed for RB: 1)quality service to customers; 2)fee-and-income generating ability; 3) bank-financial institution; 4) large; and 5) leader.

5.1.2.a Quality Service to Customers The quality of the service offered to the customer appears as a self-defining attribute for RB at the outset of the study period. Quality service is referred to in a number of ways which I considered to be variations on a theme. Thus, customer service, quality service, meeting customer needs are all interrelated labels referring to how the bank defines an important aspect of its relationship to the customer. These labels were grouped under the code quality service to customers. The following table provides the quotes related to this theme.

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1985

Table 1. Quality Service to Customers -Serving customers well remains at the heart of RB's mission. It is the basic reason for everything else we do. Traditionally, attention to customer needs, the "personal touch", has been a strong point at the Royal. It remains a constant. All our efforts to preserve the bank's financial soundness, manage costs, improve productivity, devise and introduce new products, new service delivery methods and new technology -as well as to make continuing investments in staff training - all are ultimately aimed at one primary goal: serving customers' needs well. -The Royal's strength springs ultimately from a consistent track record of service to customers. -(Consumer deposits) come to us, and stay with us, because of the quality and convenience of the service provided through our network of branches and Personal Touch Banking machines. -Delivering value (to customers) requires supporting staff with enormous resources It also requires unremitting attention to many of the strategic priorities discussed in past Annual reports. Among these is productivity improvement , which allows us to deliver more value for the price of a service Another is product innovation (and) investment in technology The Banks continuing investment in (staff) is aimed in the end at assuring that good service is delivered knowledgeably and with sensitivity to the customer. -...profitability is a signal that value is being provided, in the eyes of the people who purchase our service. -The central goal of the management team is to build on our track record for topflight customer service. By serving customers well, we aim over time to substantially improve profitability. -Expanding into ...new service areas is vital to one of our central corporate goals: to be recognized by our customers as a consistent leader in the value of our products and customer service. Commitment to quality service is a distinctive RB trademark, and to build on that strength we must continue to expand our range of services to meet growing customer needs. -Central among our goals, as I said in this space last year, is to serve customers well, and by doing so, to substantially improve profitability... -We are committed to serving customers well and in doing so, to provide career opportunities for our employees and competitive returns for our shareholders.

1986

1987

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1988

-We intend over time to lead the Canadian financial services industry not only in terms of size and scope of business, but in terms of profitability as well. The key to this, of course, is a business fundamental - that such leadership can only be achieved and sustained by the provision of nothing less than the best service available to customers in the marketplace. Business success can only be built on serving customers well. -We are convinced that quality of service -as perceived by the customer - is the primary factor determining long-term performance. A recent market survey, for example, indicates a positive correlation between the investment returns of various companies and the perceived quality of their product brands. Common sense tells you the same thing. At large corporations like the Royal -with millions of clients and a large existing market share - satisfied customers provide a springboard for effective sales and marketing. Dissatisfied customers, on the other hand, cut into business growth potential. -Our drive to improve service quality is designed to generate solid returns from heavy investment in branches, staff training, technology and investment banking subsidiaries". -Our continued success will be influenced by three important factors: customer service, technology and government regulation. -A strong commitment to customer service is fundamental to our business strategy. Our resolve to serve customers well has not diminished... -We are intent upon improving all aspects of our business as we enter a new decade so that we are better able to serve our customers and therefore, better able to increase benefits to shareholders and employees. -The bank's operating performance showed progress in 1990 on most fronts. We further refined our customer focus... For RB an absolutely top priority continues to be improvement in the quality of our service. -There is no doubt that the quality of service will be the major competitive arena in the 1990s, more so than product innovation and pricing. The fight for customer loyalty and market share will become increasingly intense as more players enter the financial services sector on various fronts and customer expectations continue to grow. -In the past two years, we have made genuine progress in our quality of service initiatives. Our formal customer surveys which are carried out regularly tell us our customers are more satisfied now than in the past. But we are not resting on our laurels. A senior bank officer has been made responsible for our service quality group, which brings definition and focus to service initiatives at every level.

1989

1990

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1991

1992

-We made good progress in 1991 towards our objective of differentiating ourselves from our competitors by being the clear leader in service quality. In 1991, more was done than ever before to learn what our customers need, want, and expect from us. A great deal of effort was also devoted to developing the effective measuring and monitoring techniques that we believe are essential to winning the battle for customer loyalty. -Solid progress was made towards our goal of being the leading provider of financial services measured in terms of service quality, customer satisfaction, and profitability. -Extensive surveys and other measures of customer satisfaction tell us that we are doing as well as the best of our competitors, perhaps even a little better. These surveys also help us measure and monitor performance against specific quality targets. Feedback from the large number of customers surveyed during the past year suggest that our service quality initiatives are paying off in terms of improved customer satisfaction. -The reduction (of branches following the merger with Royal Trust) will take place gradually to ensure the redeployment of staff is handled effectively and service to our customers is not impaired. -Providing customers with value means providing a level of service that consistently meets or exceeds their expectations at a reasonable and competitive cost. Providing value is where the battle for competitive advantage is being fought in the financial services sector. -Increased revenue generation from traditional and emerging businesses is our top priority. We will achieve this by continuing to improve service quality, diversifying and expanding our global businesses and developing our fee-generating business. -As customer acceptance of alternative delivery channels grows, we will continue to reduce the number of branches and reconfigure the network to be more responsive to our customers. -Higher levels of employee satisfaction and rewards tied to corporate goals should lead to enhanced customer satisfaction, improved cost management and higher profitability. -We became Canada's leading financial institution, one customer at a time, through our commitment to delivering innovative and high quality products and services. We have earned our customers' business by anticipating and meeting their needs, providing them with what they want at a competitive price. -For our customers, we are raising the targets for customer satisfaction and providing employees with the training, technology and time to devote care and attention to their clients. -In 1997, we added customer satisfaction and performance relative to the competition as further criteria for (employee compensation) payouts.

1993

1994

1995

1996

1997

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Description and analysis For RB, quality service to customers is a major self-defining attribute throughout 1985 and 86. This is clear from the presentation of customer service as a mission, a primary goal, a tradition, a constant, a strength, and a reason for everything else the bank does (1985). It is a theme in the organization's discourse that stands above other themes. In 1985, for example, more than half of the message to shareholders revolves around the quality service issue. A continuity in the supremacy of customer service is noted in the 1986 message to shareholders where customer service is said to be a matter of track record, consistent leadership and distinctiveness at the bank, as well as a central goal of management. It should be noted that a Canada-wide survey conducted on customers in 1985 indicated that the RB was perceived as the best run bank by seven in 10 of the RB's main customers, whereas only "five or six customers in 10 at the other major banks say their bank is best run" (Interest, Nov/Dec 1985:21). Interest magazine reports that "while our customers are satisfied with our performance (in terms of service provided by well trained and experienced employees) other major banks fall short of their customers'

expectations"(Nov/Dec:1985:22). In 1987, a similar study indicated that RB tied NB and Canada Trust in corporate reputation attributes and finished second to them in service delivery and pricing attributes... However, the RB consistently ranked ahead of CIBC, TD, BNS, and BMO. Interestingly, in the 1987 message to shareholders, serving customers well is still mentioned as a central goal but no more as a distinctive feature of the bank. In fact, the ratings do not show the RB to be ahead of the competition in terms of this attribute. In 1988 and 89, it is clear that the bank still holds the belief that service quality leads to higher profits and remains committed to the principle of providing quality service. The notion that better service leads to better profit is a constant in the bank's communication and remains so throughout the years under study. In 1985, for example, profit is said to be a signal that value is being provided in the eyes of the customers. What makes their statements in 1988 and 89 different from those in 1985 is the fact that service quality emerges more as a means to an end (size, scope and profit 1988) than as an end in itself.

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The service-profit relationship becomes more explicitly and rigorously defined in 1988. Furthermore, there is emphasis on "improving" service quality. In fact, the ratings do not show RB to be ahead of the competition in terms of this attribute. Service quality is now portrayed as an aspect of the bank to be improved and a means to higher profits and success rather than a distinct trademark, a constant and the basic reason for everything else the bank does. In 1990, quality service - which appeared in 1985, 86 and 88, but which became a more common expression than customer service in 1990 - remains a top priority for improvement. Creation of a new senior position to deal with quality, in fact, does underscore the importance that the bank places on improving quality. It can be seen as an attempt to reinforce and consolidate a desired identity attribute. In fact, the belief in the bank that quality is a source of competitive advantage and therefore, of utmost strategic importance, is reflected in the arena metaphor. Quality service becomes the weapon that will allow the winning of the battle for customer loyalty which has to be fought for on many fronts in the competitive arena. This is a quite different statement from 1985's "(consumers) come to us and stay with us". An article reported in Interest Magazine in the Jan/Feb 1993 issue, states that for two years in a row, (1991 and 92), the RB led the other banks in quality of service (except in ABMs for 1992). This article, entitled "Royal Bank leads Big Six in customer service" reports RB's senior executive VP - Retail Banking as saying that "For the second year in a row, we lead the other banks. Some tremendous initiatives by staff are taking place across the country - and they are clearly having an impact... While our challenge is to truly differentiate ourselves, the competition is making noticeable progress, and just staying the leader will be in itself a formidable task" (Interest, Jan/Feb 1993:10). This is reflected in the message to shareholders for 1991 and 92. The emphasis on the objective of achieving a "clear" differentiation from the competition demonstrates the importance, for RB, of being recognized as distinctive from the competition in this particular attribute. Other banks had been making a headway in different measures of the quality service attribute; that is, other banks could have been leaders on one or more of these

55

measures. Furthermore, the references to learning what customers need, want and expect and to developing effective measuring and monitoring techniques imply that the banks knowledge retained from the past had to be updated to serve as a guideline for ensuring a leadership position in quality service. The progress made in 1991 is qualified as good, in 1992 as solid, possibly implying that the bank is moving towards narrowing the identity gap that had been created by its slipping position in quality service relative to competitors. Despite this fact, the bank has not been able to present itself as the "clear" leader in quality, it is "perhaps" better than the best of its competitors. The Nov/Dec 1993 Interest Magazine issue reports on two major 1993 customer satisfaction surveys which indicate that while RB held its own, major bank competitors were catching up. The VP, Quality & Service Planning is quoted as saying: "We're doing many good things, but our competitors are pushing hard and the bar is rising quickly". The article further points out that RB is still as good or better than other banks, although its overall quality service position has weakened "as some competitors have improved at a greater rate. In this same article, the Senior Executive VP, Retail Banking mentions that "Retail Banking's number one strategic priority is to differentiate ourselves from the competition by setting the standard for quality service. Currently among banks, there's no significant difference. Our goal is to have RB lead the industry"(p.11.) Interestingly, the 1993 message to shareholders provides only minimal references to quality service. In fact, from 1993 to 1997, references to quality service decrease substantially. In 1994, providing customers with value (service at a competitive price) is portrayed as a competitive advantage to be obtained by winning the battle against the competition. The battle metaphor - which first appeared in 1990 when RB did not seem to be making superior advances in quality service relative to its competitors - is re-iterated. In 1994, the battle involves providing value; the price element (a competitive price) - deemed less important than service quality in 1990 - is factored in. In addition, improving service quality is clearly portrayed in the second quotation for 1994 as a means to some other priority, and is placed at the same level as other procedures like diversification and expansion. The Sept/Oct 1994 Interest Magazine features an article entitled "Customer satisfaction rises but competition

56

heats from other banks". This article again reports on two national surveys that show that RB has improved in terms of customer satisfaction, "but so have competitors RB is in the middle of the pack (after the credit unions and Canada Trust), at virtually the same level as TD, Scotiabank and BMO. While RB's score rose slightly since last year, the three other banks have all improved since 1992" (p.16). In 1995, the message to shareholders makes no reference to quality service. Responsiveness to customers lies in the reconfiguration of the delivery network (which includes decreasing the number of branches). In this year as well, customer satisfaction is said to be part of the corporate objectives, (a notion which is reiterated in 1997.) In the 1996 message to shareholders the quality service is brought in again, and appears to be a major factor through which the bank achieved its leadership position. The banks distinctiveness, however, lies in its leadership position as a financial institution and not in its providing the 'highest' quality service. In 1997, customers are one of the four groups of stakeholders mentioned in the message and about whom the bank speaks in terms of objectives. The targets for customer satisfaction have been raised. Customer satisfaction is now the responsibility of employees as individuals (their customers). Customer satisfaction has been established as one of the employees' performance objectives. In summary, it can be noticed that quality service to customers evolves from a constantly held distinctive identity attribute in 1985-86 to an objective, or a desired and projected identity attribute as the bank's customer service ratings become less distinguishable from the competition's. As the bank loses some of its grounds to the competition, talk about customer service gets cast in metaphorical terms referring to battles that have to be won against the other banks. Gradually, customer service loses its supremacy as a reason for everything else the bank does and becomes one of the things the bank does to achieve higher revenues and profits. The change in the banks rating with respect to the competition, which is an external context factor, appears to have an influence on the evolution of this identity theme.

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5.1.2.b Fee-and-income Generating Ability Another self-defining attribute which appears in the MTS is RBs fee-and-income generating ability. Unlike quality service, fee-and income generating ability is not presented as part of the banks tradition. However, as the years go by, the fee-and income generating ability theme takes on a more central place in the banks communications and operations. It should be noted that at the beginning of the study period, when the issue of fee-generating services (1986) is addressed, we see no explicit association between this issue and the issue of high income generation ability. The association is made explicit towards the end of the study period (1996) when fee-based business is said to provide high ROE and above average prospects for profitable growth. I have treated them both as aspects of the same theme. The following table provides quotations on this theme.

Table 2. Fee-and-income generating ability 1986 -Another strength, evident in the year's results, is our ability to generate fee income, which now accounts for almost a quarter of total net revenue and helps to counterbalance the effects of relatively slow commercial asset growth. Fee income from retail banking services and foreign exchange trading operations were key earnings contributors. As well, fee-generating services will increasingly play a vital role in helping to build strong, lasting and profitable relationships with customers. -Our stronger retail orientation has significantly lowered Royal Bank's risk profile. Further improvements will result from the emphasis we have placed on fee-based and trade services. -Increased revenue generation - from our traditional banking and newer emerging businesses and from cross-selling opportunities within the bank - is our top priority. We will achieve this by continuing to improve service quality, diversifying and expanding our global businesses and developing our feegenerating businesses. -Revenue growth and diversification will be achieved by strengthening the traditional consumer businesses, by expanding fee-based businesses, and by selective international growth. -Fee-based consumer businesses with the greatest opportunities for expansion include insurance, wealth management, mutual funds and retail brokerage. In addition, business banking and financial institutions and trade hold prospects for further growth and increased profitability.

1991

1994

1995

58

1996

-Our focus is on securing consistent, superior returns for our shareholders and all our initiatives are undertaken with that goal in mind. -As Canadas premier, and one of its most profitable, global financial institutions dealing with one in three Canadians, we will continue building on our strengths. They include a leading market position in Canada in most of our businesses, an exceptionally strong position in high-growth fee-based businesses -We will look for profitable growth that builds and strengthens our market competitiveness and shareholder value, paying particular attention to businesses with relatively high returns on equity, high price/earnings multiples and aboveaverage prospects for profitable growth We intend to grow rapidly in highpotential businesses, which are the wealth management businesses, as well as insurance and trade finance. These businesses are largely fee based, need relatively little capital, and in most cases generate high returns on equity. Our three main acquisitions this year (in insurance, retail brokerage and securities custody) all fall in this high-potential segment and attest to our commitment to growing this important side of our operations. -We recorded solid growth in personal and small business lending, and excellent performances from fee-based businesses such as mutual funds, global private banking, securities custody, investment management, retail brokerage, and investment banking and trading. This allowed other income to rise to 46% of total revenues from 41% in 1996. -We want to continue to provide top quartile returns to our shareholders by continuing to lead the industry in ROE, earnings growth and valuation. -We intend to grow high-ROE fee-based businesses, as we have done in the past. Our recent acquisitions, in securities custody and retail brokerage, have been in such businesses. -The pursuit of our objectives of revenue growth in high-return businesses and (other objectives) should allow us to generate solid returns for our shareholders.

1997

Description and analysis In 1986, fee-generating ability is portrayed as a strength at the bank as it contributes revenues and growth. Like most other spheres of activity at the time, it is linked to customers and the banks relationship with them, fee-generating services will increasingly play a vital role in helping to build strong, lasting and profitable relationships with customers. The bank projects that fee-based services will be increasingly vital in the future. In 1991, these services are seen to decrease risk. In 1994, revenue generation is said

59

to be the banks top priority, an expression previously reserved to quality service. Revenue generation is said to be achieved by improving service quality, global diversification and expansion, and the development of fee-generating businesses. This association between revenue generation and fee-based business expressed in 1986 becomes more elaborate in 1994 and 1996. It should be noted that 1994 marks the year in which Royal Trust, acquired by the bank in 1993, became more integrated with the bank operations. Royal Trust business is largely fee-based. In 1995, the emphasis on revenue growth as an objective continues, and so does the association of revenue growth to fee-based businesses. These businesses are said to hold prospects for increased profitability, the latter being the focus of the bank and the center of all initiatives at the bank. Here, the emphasis is clearly placed on the shareholders, indicating a shift in stakeholder focus: while in 1986, revenue generation was said to benefit the customer, in 1995 it is said to serve the shareholder. In fact, 1995 marks the year the banks shares became listed on the New York Stock Exchange. This same year, the bank raised its target for ROE to a range of 16-18% reflecting its desire to be in the first quartile of the 40 largest North American banks. In both 1994 and 95, RBs ROE exceeded 16%, the best performance of all major Canadian chartered banks (Annual Report, 1995). In 1996, the bank is said to have a position in high-growth fee-based businesses which is exceptionally strong, a mark of distinctiveness. The bank will continue its pursuit of fee-based businesses which require little capital and therefore generate a high ROE. In fact, its implementation efforts involve acquisitions which all fall in this category of business. In 1997, we can observe a continuity with the recent past in the emphasis on feebased businesses and continuing to lead the industry in ROE, again indicating distinctiveness in achieving high earnings. By 1997, other income constituted 46% of total revenues - a substantial increase from almost 25% in 1986. In summary, although fee-generation is mentioned as early as 1986, it is not before 1994 that it assumes a central role in discourse and not before 1996 that it is presented as a mark of distinctiveness. During the later years, an explicit association is made between feebased services and the banks distinctively high ROE. This evolution in the theme is

60

accompanied by the banks acquisitions of Royal Trust and other companies that are highly reliant on fee-based business, as well as by the banks listing on the NYSE. The later years also show an increased emphasis on the shareholders who stand to benefit the most from the banks high returns.

5.1.2.c Bank-Financial Institution (FI) In its self-presentation, it can be noted that RB refers to itself at the beginning of the study period as a bank and that this reference gets replaced eventually by financial institution or variations thereof. The following table traces the evolution of the Bank-FI theme. It should be noted that the quotations provided here are derived from two sections of the annual report: the MTS and the Corporate Profile. The latter usually appears within the first two pages of the annual report, before the MTS. In later years, RB uses the title Who We Are instead of Corporate Profile to give a synopsis of itself. Quotations from the Corporate Profile section are preceded by an indication that this is the case. All other unreferenced quotations were taken from the MTS. Table 3. Bank-FI -From Corporate Profile: The Royal Bank of Canada, chartered in 1869, is Canadas largest chartered bank Two fundamental goals have always been paramount: excellence in banking service across Canada and vigorous participation in international financial markets. -Longer term market trends demand that the Royal Bank set for itself ambitious goals. Given the right regulatory climate, we plan to move from being Canada's largest chartered bank to become this country's leading provider of financial services, while remaining a prominent force in selected international markets. -Opportunity was seized equally decisively - one example is that with deregulation in Canadian financial markets, we reached an agreement in principle, on December 1, to acquire 75% of Canada's premier securities firm, Dominion Securities. This is a significant milestone in the Royal's 118-year history. It will substantially expand the range of services for clients, and clearly reinforces our position as Canada's leading financial institution.

1985

1986

1987

61

1988

-From Corporate Profile: The Royal Bank of Canada, chartered in 1869, is Canadas largest bank... Two fundamental goals are paramount: excellence in a full range of financial services across Canada and vigorous participation in selected international financial markets. A key subsidiary, RBC Dominion Securities Limited, is Canadas leading investment dealer. Portfolio management and mutual fund services are offered in Canada by another subsidiary, Royal Bank Investment Management Inc. -We completed strategic acquisitions which, by putting the Royal Bank group in the investment banking and investment management markets in Canada, represent solid progress in our transition from a bank to a more broadly-based financial services enterprise. -Our overall objective in Canada is to be the leader, not just in banking, but in providing a broad range of bank-based financial services to all sectors of the market. Our developing businesses will play a key role in achieving this goal. -In 1990, Royal Bank recorded solid results from its core businesses, further strengthened its capital base and built on its position as Canada's leading provider of bank-based financial services. -From Corporate Profile: The Royal Bank group is among North Americas largest providers of integrated financial services with more than eight million personal and business clients. We rank first among all financial institutions in Canada in. Investment banking activities are carried on by RBC Dominion Securities, Inc., Canadas leading investment dealer. The acquisition of Royal Trust in 1993 greatly expanded the strengths of the Royal Bank group in the areas of personal and institutional trust services, mutual funds, investment management and securities custody services - for which Royal Trust has a world-class reputation. Other subsidiaries include discount brokerage services, marketed under the name Action Direct, and a substantial credit, travel and health-related insurance business -In 1993, Royal Bank moved closer to becoming a fully integrated financial services group. -Our goal in 1994 is to complete this integration and to take full advantage of the opportunities to broaden client relationships across the Royal Bank group. Royal Trust has brought with it strength and leadership in such businesses as personal and institutional trust, securities custody and investment management. It has also allowed us to increase market share in core banking products like residential mortgages, consumer loans and deposits where we rank first among Canadian banks, as well as in such high-growth areas as mutual funds where we now rank second among all financial institutions. -Increased revenue generation from traditional and emerging businesses is our top priority.

1989

1990

1993

1994

62

1995

1996 1997

-Most of our efforts in the past decade have centered on broadening our financial services franchise with individual and corporate clients. Our acquisitions of Dominion Securities, Voyageur Insurance Company, and, more recently, Royal Trust gave us the foundation we wanted as the largest broad-based provider of financial services in Canada, with a strong presence in selected markets abroad. -From Corporate Profile: Royal Bank Financial Group has leading positions in Canada in most financial service markets. -Revenue growth and diversification: We intend to grow high-ROE fee-based businesses, as we have done in the past. Our recent acquisitions, in securities custody and retail brokerage, have been in such businesses. In the more traditional business lines, we see further opportunities in card services, personal lending and banking for small businesses. Outside Canada, we will focus largely on the wealth management businesses.

Description and analysis As the study period opens, we can see that RB defines itself as Canadas largest bank, a fundamental goal of which is excellence in banking service across Canada (1985) with an ambitious goals of mov(ing) from being Canadas largest chartered bank to become this countrys leading provider of financial services (1986). Achieving this goal is impending on the regulatory climate. In 1987, with deregulation, the bank reached an agreement to acquire Dominion Securities, a move described by the bank as a significant milestone in the Royals 118-year history, one of the few references the bank makes in its MTS to its history. The move is described as reinforcing the banks position as Canadas leading financial institution. Clearly the acquisition moves the bank a step closer to the goal stated in 1986. In 1988, the Corporate Profile still defines RB as a bank with a major goal of providing a full range of financial services. The MTS for this year indicates that strategic acquisitions represent solid progress in the banks transition from a bank to a more broadly-based financial services enterprise. In 1989, the banks objective to provide a broad range of bank-based financial services shows continuity with its stated objectives in 1988. In 1991, the bank is said to provide a full-range of banking services and in 1993, it is said to be a provider of integrated financial services. In 1993, the bank is again said to have moved closer to becoming a fully integrated financial services group, which in 1986 was stated as a goal. As with the

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Dominion Securities acquisition, the bank is said to be moving closer or effecting its transition. In 1988, the transition was said to be towards a broadly-based financial services enterprise whereas in 1993, the move is toward becoming a fully integrated financial services group. Each acquisition brings the bank towards more comprehensive services in the financial industry. In this same year (1993), the Royal Trust acquisition is said to have increased the banks market share in core banking products as well as in high growth areas such as mutual funds, which apparently were not considered then core banking products. In 1994, the banks priorities lie in increasing both, the traditional and emerging businesses. What would have been the core business in the past is now referred to as traditional. Traditional business is a term that appears in subsequent years (1996 and 1997). We see a transition from a self-definition as a bank (1985) to a financial institution provid(ing) banking and related financial services (1989) to (one of the largest) providers of integrated financial services(1993) to having a leading position in most financial services markets (1996). This is accompanied by an evolution in labels from core businesses (1990 and 93) to traditional business (1994) which refer to card services, personal lending and banking for small business (1997). The

emerging businesses (1994), on the other hand, include high growth areas as mutual funds (1994). By 1997, what used to be the core services up to 1993 are still referred to as traditional whereas the term emerging is no more used, possibly indicating that high ROE fee-based businesses as securities custody and retail brokerage (1997) are now considered regular and not just emerging businesses for the bank. As RB makes acquisitions in different areas of the financial services industry, and as it achieves a higher proportion of its revenues from such businesses, it narrows the identity gap and considers itself more as an integrated-service financial institution than as a bank. Note that this is accompanied by a change in the banks name from Royal Bank to Royal Bank Financial Group.

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5.1.2.d Large Without exception, for every year of the study period, RBs Corporate Profile makes reference to some measure of the banks size and its rank with respect to a comparison group. The MTS also includes several references to these measures. The table below provides quotations on size and the variations thereof. Different labels are used to refer to the banks size: large, leading market share, most extensive, first rank (in terms of size). To simplify the discussion, I will refer to this theme as large. Table 4. Large -From Corporate Profile: The Royal Bank of Canada, chartered in 1869, is Canadas largest chartered bank, with assets at the end of fiscal 1985 of $96 billion.The Royal Banks extensive network of branches, subsidiaries and affiliates comprises more than 1680 operating units in 44 countries. One of the worlds largest retail banks, the Royal is also North Americas fifth largest bank overall. -The Royal is not only Canada's largest financial institution, it is one of the country's largest and most respected service businesses. -Given the right regulatory climate, we plan to move from being Canada's largest chartered bank to become this country's leading provider of financial services, while remaining a prominent force in selected international markets. -The partnership of Canada's largest financial institution and its largest securities dealer will create a uniquely Canadian force in the market. -We intend, over time, to lead the Canadian financial services industry not only in terms of size and scope of business, but in terms of profitability as well. -From Corporate Profile: The Royal bank of Canada, with assets of $114.7 billion, is Canadas largest financial institution and the fifth largest bank in North America. It provides banking and related financial services to eight million retail and business customers through its 1,560 Canadian branches and specialized business centres and 2,324 banking machines - one of the largest networks in the world. -(We have) the largest proprietary network of banking machines in North America

1985

1986

1987 1988 1989

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1990

-At the end of the year, total assets stood at $125.9 billion, making Royal Bank the third largest bank in North America. -Royal Bank has some distinctive strengths that set us apart from our competitors. We have an extensive and well-developed network of branches and other customer service units which, like our system of automated banking machines, is the largest in North America. We have a sizeable customer base and a substantial share of market in most sectors. -From Corporate Profile: Royal Bank is Canadas largest financial services enterprise and one of North Americas largest banks. We rank first among all financial institutions in Canada in terms of assets, capital and stock market value. We also command the largest market share of consumer loans, mortgages and deposits in the country. Investment banking activities are consolidated within RBC Dominion Securities inc., which dominates the Canadian market in size and performance. -Royal Trust has brought with it strength and leadership in such businesses as personal and institutional trust, securities custody and investment management. It has also allowed us to increase market share in core banking products like residential mortgages, consumer loans and deposits where we rank first among Canadian banks, as well as in such high-growth areas as mutual funds where we now rank second among all financial institutions. -Looking ahead, 1994 will mark our 125th year as a Canadian chartered bank. We were founded on the Halifax waterfront by eight enterprising merchants. From these modest beginnings, we have grown with Canada. Because Canada is a trading nation, we also expanded internationally to become one of the largest banks in the world. But, size for its own sake is not the objective. Our focus in the months and years ahead will be on building a profitable business that succeeds by providing value to our customers and better returns to our shareholders. -From Corporate Profile: Royal Bank Group is among North Americas largest providers of integrated financial services with more than 9.5 million personal and business clients. We rank first among all financial institutions in Canada in stock market capitalization and total assets, and first or second in almost every type of financial service provided in the Canadian Market, except insurance. Our services are provided through one of the largest banking networks in the world - almost 1,600 Canadian branches and special business units, over 3900 banking machines, 4422 self-serve account updaters and over 30,000 point-of-sale merchant terminals. -To reduce costs, we continued to streamline the branch network in 1994, closing or merging 41 of the 141 branches of Royal Trust. In addition, we reduced the number of Royal Bank domestic branches by 90. The bank has one of the most extensive and efficient retail branch networks in North America and one of the largest proprietary electronic banking networks in the world.

1991

1993

1994

66

1995

-Royal Bank's strength derives largely from our leading share of the domestic retail financial services market. Approximately 75% of our earnings today come from providing banking and related services to individuals and small and medium-sized business customers. -We derive a much higher proportion of our deposits from individuals than do other Canadian banks, a significant advantage as these deposits are more stable than wholesale funds. Similarly, residential mortgages and other consumer loans, which are attractive because of their relatively stable and low loss ratios, represent a much higher percentage of our overall lending than for the other Canadian banks. We have the largest market share of residential mortgages, consumer deposits and consumer loans, and the greatest number of small and medium-sized clients of any financial institution in Canada. -From Corporate Profile: Royal Bank is Canadas largest financial institution as measured by market capitalization, revenues and net income. We have leading positions in most Canadian financial services markets We serve nearly 10 million individual and business customers around the world. In Canada we have leading market shares in residential mortgages, personal loans and deposits and business loans. We are the largest money manager and the third largest provider of mutual funds (first among bank-owned funds). Our domestic delivery network includes more than 1,400 branches, 4,200 automated banking machines, 570 self-service account updaters, and 84,000 point of sale merchant terminals. With 1.3 million customers, Royal Direct is among the worlds largest alternative delivery channel providers

1997

Description and analysis As the above quotations indicate, size seems to be an integral component of the banks self-definition. The centrality of this theme derives from its association with strength in the industry (for example, 1995). Its distinctiveness derives from the banks rank relative to other organizations with which it compares itself. Different measures of the banks size are touted: its assets, delivery network, market share for a variety of products and services, market capitalization, revenues, net income The bank defines not only itself in terms of size, but also its partners or acquisitions. Thus DS is said to be Canadas largest securities dealer (1987) and RT is said to have brought with it strength and leadership making RB first or second among Canadian banks in terms of a number of financial products (1993). Even in 1994, after the bank announces that it has streamlined its retail branch network, it indicates that it has one of the most extensive and efficient retail branch networks in North America and

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one of the largest proprietary electronic banking networks in the world. Size is one of RBs attributes which confer upon it distinctiveness since it ranks higher than other organizations in the industry along a number of measures of size. In fact, the bank addresses mainly those measures of size that allow it to claim distinctiveness within a particular reference group. Evoking its distinctive size is a constant in the banks discourse over the years. The issues that evolve with time are the particular measures of size the bank evokes and the particular membership groups which are used as a reference for the comparison. Two issues are noteworthy here. First, size is associated with financial and competitive strengths as the quotations in 1988, 93 and 95 indicate. In 1988, the banks goals of leading the industry in size is associated with that of leading in profitability. This appears more clearly in 1993 when we are told that size for its own sake is not the objective. Rather the objective is to build a profitable business. These statements lead us to infer that size leads to profitability. In 1995 when the banks leading share of the domestic retail market as compared to competitors is mentioned. This is associated with financial stability which is portrayed as a strength. Second, RB has been, for a good part of its history, the largest bank in Canada. A self-description of the bank provided in a 1993 issue of Interest magazine(Sept/Oct 1993) at the occasion of the RT acquisition, points out that: In 1920, the Royal Bank edged out Bank of Montreal to become Canadas largest bank in terms of assets, and for the next 21 years was in a see-saw battle for top spot with Bank of Montreal. Since 1941, Royal Bank has remained on top. It should be noted that the above quotation represents one of six landmark events the bank chose in order to portray its 125-year history in the above-mentioned publication. Interestingly, a battle is said to have been waged for taking up the top spot or top rank in size. In other words, being the largest bank in Canada, seems to be an issue of historical relevance, centrality and distinctiveness.

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5.1.2.e Leader An attribute of RB which appears consistently in the banks discourse is its position as a leader. Table 3 provides the quotations for the leader theme. Table 5. Leader -From Corporate Profile: The Royal Bank is a leader in the application of new technologies for efficient operational management and in making possible a variety of sophisticated new services. -one of our central corporate goals: to be recognized by our customers as a consistent leader in the value of our products and customer service. -Given the right regulatory climate, we plan to move from being Canada's largest chartered bank to become this country's leading provider of financial services. -Dominion Securities Limited has a track record of excellence in service and profitability, based on top-caliber leadership and highly respected professional talent. -We intend, over time, to lead the Canadian financial services industry not only in terms of size and scope of business, but in terms of profitability as well. The key to this, of course, is a business fundamental - that such leadership can only be achieved and sustained by the provision of nothing less than the best service available to customers in the marketplace. -Our overall objective in Canada is to be the leader, not just in banking, but in providing a broad range of bank-based financial services to all sectors of the marketOutside Canada, our broad objective is to be the leading Canadian financial services enterprise globally. Our strong international presence and our position as Canada's leading bank abroad over many decades have been significant contributing factors in achieving dominance at home.

1985

1986

1987 1988

1989

1990

-Our leadership in systems and technology, particularly at the client servicing level, is a competitive advantage that we intend to exploit. -We have a sizeable customer base and a substantial share of market in most sectors. And we are the leader in developing and implementing bank-related technology. -We are immensely proud of the leadership Royal Bankers demonstrate - not only in the marketplace but also in the community. -We made good progress in 1991 towards our objective of differentiating ourselves from our competition by being the clear leader in service quality. -As we move forward, Royal Bank's business strategy will continue to be driven by four corporate objectives:- be the leading Canadian financial institution best positioned globally, -be a leading employer committed to excellence. -Royal Trust has brought with it strength and leadership in such businesses as personal and institutional trust, securities custody and investment management.

1991 1992

1993

69

1995 1996

1997

-Royal Bank's strength derives largely, from our leading share of the domestic retail financial services market. -As Canadas premier, and one of its most profitable, global financial institutions dealing with one in three Canadians, we will continue building on our strengths. They include a leading market position in Canada in most of our businesses. -From Corporate Profile: Royal Bank is Canadas largest financial institution as measured by market capitalization, revenues and net income. We have leading positions in most Canadian financial services markets -We want to continue to provide top quartile returns to our shareholders by continuing to lead the industry in ROE, earnings growth and valuation. -(We have) leading-edge work/family/life, gender gap and diversity policies and programs

Description and analysis In its statements of Corporate Profile, as well as in its MTS, the bank frequently refers to its leadership position. The banks partners or acquisitions are also said to be leaders in their field: Dominion Securities Limited (acquired by the bank in 1987) is said to have a track record of excellence in service and profitability, based on top-caliber leadership, and Royal Trust acquired by the bank in 1993 is said to have brought with it strength and leadership. Even Royal bankers demonstrate (leadership)in the

marketplace (and) the community (1990). The leadership label, however, applies to a variety of objectives (projected identity attributes) as well as achievements including the banks size, scope and profitability (1988), providing a broad range of bank-based services (1989), system and technology (1985, 89, 90), U.S. foreign exchange market (1989), market share position (1992, 95,96), and ROE and HR practices (1997), to name a few. The leader label persists throughout the years and is used to refer to a variety of aspects of the bank. The bank does not explicitly address why it seeks leadership, or why this seems to be a central issue for it. We do know, however, that a leadership position implies the banks ability to perform better than its competitors and therefore is a mark of distinctiveness. In 1991, for example, RB indicates that being the clear leader in service quality allows the bank to differentiate itself from the competition. As important, however, is the fact that banks symbol includes a lion, the Leo, as it is referred to by bank

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employees and bank publications. The following are excerpts from an article entitled The one and only Leo in Interest magazine: In the minds of staff, customers and the general public, the familiar Lion and Globe symbol - better known by his nickname of Leo - has come to represent the Royal Bank and all it stands for. Leo adorns just about everything connected with the bank and together with the name The Royal Bank of Canadahas served as the banks trademark since the early 1960s.. The committee of bankers and designers formed (in the 1960s) to select the new trademark agreed the symbol must reflect the Royals image as Canadas leading bank and should indicate the scope of the Royals business not only in Canada, but throughout the world. Leo was created to fulfill this far-reaching role. The lion continued the idea of royal which stood for quality, while the globe indicated the banks worldwide scope. A crown complete with fleur-de-lis tops off the logo to reinforce the idea of superiority. The adoption of the Lion and Globe symbol and the unique lettering for the Royal Bank name, was a radical transformation of our public identity, one that may have been one of the most important policy changes made in the early sixties according to Chairman and CEO Rowland C. Frazee and COO Allan R. Taylor (Interest, Feb/Mar 1985:20). In this article, the Leo is said to represent the banks public identity and everything the bank stands for: leadership, quality, scope, and superiority. We thus see that the leadership theme is part and parcel of the banks persona - what it stands for to the staff, customers and the general public. Furthermore, this attribute seems to be of historical relevance, having persisted since at least the 1960s.

-x - x-

In this section I traced the developmental trajectory for RB themes. In the next section, I turn to BMO.

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5.2 BANK OF MONTREAL

5.2.1 HISTORICAL OVERVIEW (Source: A Short History of Bank of Montreal: A Tradition of Leadership, Bank of Montreal, 1992 and www.bmo.com/history.) The Bank of Montreal was founded in 1817 under the name of Montreal Bank by nine merchants. Shortly after its establishment, the bank expanded into different areas of Upper and Lower Canada. At the time, Upper and Lower Canada were British colonies, and neither had a currency of its own. The Montreal Bank provided its own bank notes which were an acceptable and reliable circulating medium( A Short History, p.3). Here the Banks early history was a story of firsts funding, for example, the building of Canadas first canal (Lachine 1821-1825), and its first railway (Champlain and St.Lawrence, 1832-36). In 1822 it was granted a charter under the name of Bank of Montreal. In 1859, the bank established a permanent agency in New York which was followed in 1961 by another agency in Chicago, following the patterns of trade. Bank of Montreal strongly supported the movement for union of the British North American provinces. When Confederation was finally achieved in 1876, the Bank was called upon by Finance Minister Alexander Galt to become the new federal governments banker( A Short History, p.7). The bank grew by opening new branches and through mergers and acquisitions. The Bank ceded its role of central bank in 1934 and the Bank of Canada took on the exclusive right to issue currency. With this, Bank of Montreal banknotes which had been issued since 1817 were phased out over a period of fifteen years. In 1984, the bank acquired Harris Bankcorp, Inc., a retail bank in the Chicago area. In 1987, it acquired the securities dealer Nesbitt Thomson, Inc. With the falling of the four pillars, the bank has increased the range of services it offers. In 1992, the bank was represented directly in 11 countries and had a network of correspondents around the

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world. In 1996, it made a major investment in Mexicos Bancomer and became the first NAFTA bank (Annual Report, 1996). In 1998, Bank of Montreal had total assets of $222,590 million. The period under study saw the succession of three executives to the top positions of chairman of the board, CEO, president and/or COO. Thus, the MTS, the main source of data for this study was signed by the following executives: 1985-1989: 1990: 1991-1997: William Mulholland (Chairman and CEO CEO only until 1988) Matthew Barrett (Chairman and CEO) and Tony Comper (President and COO) Matthew Barrett (Chairman and CEO)

The BMO data analyzed reveals a large difference between the style of Mulholland and that of Barrett. While Mulholland spoke at length on economic, political, and social issues directing attention more to the external environment than to BMO itself, Barrett emphasized the bank, with a few occasional remarks on national and economic issues. These differences are reflected in my analysis. At several occasions, I will point out how Barretts discourse showed a continuity or a break with Mulhollands.

5.2.2 IDENTITY THEMES A number of identity themes surface in BMOs discourse. Notable among these are the banks self-definition as Canadas first bank, which takes on two different meanings in the banks discourse: oldest and innovative. BMO also defines itself as a North American bank, and a bank committed to its four stakeholders. These are the themes analyzed in this section.

5.2.2.a First First is a label that did not appear with Mulholland, but which became prominent with Barrett. In fact, it is used in two different senses: 1) sometimes it refers to BMO being the oldest bank in Canada, and 2) at other times it is used to indicate that the bank was the first among other institutions in Canada to undertake some strategy or

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procedure and, therefore, refers to the banks innovative stance. The following quotations provide examples of the two meanings attributed to first. The first two quotations are taken from the MTS. The third quotation is taken from BMOs statement of history (www.bmo.com).

1991

1993

1999

Table 6. First -In 1992 Bank of Montreal will celebrate its 175th anniversary. We first opened our doors on November 3, 1817, at 32 St. Paul Street, Montreal. We were the first bank in Canada, and we have been in business ever since -Being first is a Bank of Montreal tradition. In 1817 we became Canada's first bank. In 1832 we financed the first Canadian railway, launching the connections essential to this country's growthAnd in 1993 we continued to set the pace for the Canadian industry with our newest first, continent-wide banking -our North American strategy is both an exhilarating new departure, with immense promise for all our stakeholders, and a natural development from our proud Canadian past. It's an old tradition - and a real first. And that's as it should be, for Canada's first bank. Canadas first bank: Bank of Montreal is Canadas oldest bank. As can be seen, first is used to refer to the banks being the oldest FI in Canada

in 1991 and 1999. In 1993, first assumes both meanings in the first quotation, as well as in the second whereby an old tradition and a real first for Canadas first bank are juxtaposed. Because both meanings of the first label seem to be self-defining for the bank, I traced them separately. 5.2.2.b Oldest Bank It must be noted that the term first appears for the first time in 1991 with Barretts second MTS. In this statement it alludes to BMOs being Canadas oldest bank. However, the reference to BMOs being one of Canadas oldest banks does appear before 1991, but not accompanied by the first label. Consider the following quotations which refer to the banks age:

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1985

1989 1990

1991

Table 7. BMOs age -the Canadian banking system has a history of extraordinary stability and service. This Bank, for instance, has an unbroken record of service for 168 years, longer than the life of most countries. -It is clearly in our interest to uphold these values (of integrity and prudence), but it is also a responsibility which comes with more than 170 years of honorable service. -Planning is vital to success. But a clear sense of purpose and identity are also essential. While we are Canada's oldest bank, we are also a multi-faceted, contemporary corporate family -We were the first bank in Canada and we have been in business ever since. - For most Canadians the canoe and the snowshoe are now sports equipment, in part because we financed the first canal and the first railway. -In 1817 we became Canada's first bank.

1993

Description and analysis The first two quotations in the table above, occurred during Mulhollands time. Age here is portrayed as a sign of the banks capacity to offer stability and service, as well as an attribute that confers responsibility on the bank in terms of upholding values that will safeguard the interests of different stakeholders. The old age themes centrality is further demonstrated in 1990 with Barretts reference to the importance of a sense of identity. Their sense of identity involves a recognition of the banks age. Not only is the banks age a central issue, it is also a source of distinctiveness. Being Canadas oldest bank is a mark of distinctiveness that can never be surpassed by any other bank. In fact, Barrett takes the old bank theme one step further than Mulholland. While Mulholland refers to BMO in 1985 as one example of a number of old banking institutions, Barrett presents it as the most distinctive banking institution with regard to age. In later years, oldest bank is replaced by first bank in the MTS. In 1991, we were the first bank in Canada, and we have been in business ever since indicates a continuity with Mulhollands statements regarding an unbroken record of service throughout many years. Not only is BMO the first and oldest bank in Canada, it is also associated with the first and oldest canal and railway, aspects of major economic and social impact for Canada and Canadians. With this the banks age is intertwined with the banks historic achievements and possibly innovations. Actually the use of first here is

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ambiguous; it is hard for the reader to tell whether the label is intended to refer to oldest or most innovative. One thing is clear in the 1991 MTS: the history of the bank is closely associated with the history of Canada; it is a sign of the banks notoriety as well as its social responsibility, as the quotations in the table below indicate. The 1991 annual report is a celebration of the banks 175th anniversary. The banks achievements, performance and objectives for the year do not receive a single mention in this years MTS. Instead, the banks past achievements, its existence before Canada and its role in building Canada are detailed. And so is the banks responsibility to remind Canadians that they have an exceptional country. Here are most of the quotes from the 1991 MTS: Table 8. Quotations from the 1991 MTS In 1992 Bank of Montreal will celebrate its 175th anniversary. We first opened our doors on November 3, 1817, at 32 St. Paul Street, Montreal. We were the first bank in Canada, and we have been in business ever since. In this 1991 Annual Report we therefore look both forward and back. 1817 was an unimaginably different world. Montreal had 16,000 people and lived by the fur trade. Canadians traveled by canoe and snowshoe... Canada was a colony, governed from London. Change has been enormous and is still accelerating. Through it all, Bank of Montreal has survived, and grown mightilyWe have grown with Canada - and we have helped Canada to grow. For most Canadians the canoe and the snowshoe are now sports equipment, in part because we financed the first canal and the first railway. Our loans helped lay Canadian Pacific's 3,000 miles of track and, 80 years later, we financed Churchill Falls. Today we are still working with Canadians, both in millions of individual lives and in our undertakings as a nation. It is timely to remember these things, for two reasons. 1992 will also be the 125th anniversary of Canadas Confederation. That calls for a celebration, and few people have more to celebrate than Canadians It is, for me, a humbling thought that only a tiny minority of all the human beings who ever lived have been as fortunate as Canadians - not only in material things, but in the intangibles of peace and freedom. Yet this anniversary is also a time to pause and take stock. In recent years, Canadians have seemed more and more unsure of the way ahead. We are deeply divided on our constitutional future. In a time of bewildering change, we are unsure of our ability to earn our living in the world's markets and give our children a better life than ours and, at the same time, to preserve our natural heritage and do our duty to the less fortunate. And the stress is showingUnderlying all these unhappy symptoms is simple, oldfashioned ignorance - ignorance of our country and of all we have achieved and, even

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more, ignorance of each other. At Bank of Montreal, we believe we can best celebrate Canada's anniversary and our own by reminding Canadians how rich we all are through the astonishing variety of the regions and peoples that make up the Canadian totality. For this special Annual Report we asked eight Canadian writers of standing to bring us a vision of CanadaTogether, they paint "A Portrait of Canada" which we hope will bring the Canadian reality home to our shareholders and our friends in Canada and abroad. We are not doing this to give the public one more study that aspires to be detached, objective and impartial. Far from it. At Bank of Montreal, we are unequivocally committed to the Canadian ideal of a democratic, pluralist society, where one roof covers many hearths and a just balance has been struck between individual and collective rights. We are committed, because over 175 years we have seen that even the less-than-ideal Canada of the past has workedBut in the broadest view, Canada has been good to many people. It has certainly been good to Bank of Montreal. We can best thank Canada by helping Canadians to know their country, for knowing it is the first step to rebuilding it with ample room for all its people. This special Annual Report is our way of doing that, and I hope you will all read it with profit and pleasure. A number of issues emerge from this MTS. Several references are made to the fact that BMO not only preceded Canada as a sovereign state, but also helped build this country. The banks history and legacy seem to be a source of notoriety and therefore distinctiveness, as well as a source of social responsibility. BMO considers it a part of its responsibility to bring the Canadian reality home to the readers. This resembles in some ways Mulhollands 1989 statement indicating that upholding values is a responsibility which comes with more than 170 years of honorable service. While the banks age and its implications are given attention in the MTSs until 1993, references to its age are dropped in subsequent reports. In those reports, first is used mainly to refer to the banks innovative stance. Let us look at the banks selfdescription as an innovative creative bank, the second meaning associated with the first label. The table below provides quotes on this theme.

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5.2.2.c Innovative BMO uses different labels to talk about its being the first institution to undertake a number of initiatives. These include innovative, creative, and a bank that leads change. The following table provides quotations on this theme. Table 9. Innovative -This past decade has witnessed dramatic growth and significant structural changes in international financial markets. Among the most important were the virtual disappearance of boundaries to capital flows in the western world, the massive flow of capital to North America, rapid technological change with its concomitant explosion of financial innovation and a chronic oversupply of financial services. -Supporting small business and agriculture means paying attention to what our customers want and, whenever possible, giving it to them. We have kept our prime rate below our competitors for over 389 days since August 1, 1990. We are the only bank to offer a Small Business Lending Rate tracking 1% below prime There is moreWe have a pilot project to help viable businesses through temporary setbacks. Bank of Montreal works actively with emerging segments of the business community such as women entrepreneurs and Aboriginal business people. And although we know this will be a long haul, we intend to become the informed bank, the bank of choice, for the knowledgebased, sunrise industries that will help make Canada prosperous tomorrow. Each of these actions is a small step forward in itself. Together they are a radical change in the way we do business. And the results are showing. In a contracting market for small business credit, our market share has risen by 2.3% in just two years. -Being first is a Bank of Montreal tradition. In 1817 we became Canada's first bank. In 1832 we financed the first Canadian railway, launching the connections essential to this country's growth. Almost 150 years later, we were the first bank to establish a national electronic connection, linking all our branches to a central computer. And in 1993 we continued to set the pace for the Canadian industry with our newest first, continent-wide banking. -In June we announced our North American strategy for the 1990s, Vision 2002. By the early years of the new century it will make us the first full-service financial organization to span North America. Canada, of course, will always be our home and our number one market. We shall invest, innovate, and compete more vigorously than ever in this country... Thus Vision 2002 is also our creative response to the ever-increasing integration of the world's economies. -In five years, we have established a reputation as a bank that leads change,uses technical innovation intelligently, and is sensitive to the

1989

1992

1993

1994

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evolving needs of our customers and employees. 1994 brought two excellent examples. Our It is Possible marketing campaign made the tools of basic financial planning available to all Canadians for the first time. -And we became the first Canadian bank ever to be listed on the New York Stock Exchange -We have come a long way in five years and, as you can see, 1994 especially has been a year to remember in the long history of our Bank. It will probably be remembered longest, however, for the opening in May of our Institute for Learning in Scarborough, Ontario. The first purpose-built corporate facility of its kind in Canada, the Institute will receive over 15,000 students a year, coming from all the companies in the Bank's family. But despite its scope, the IFL is only the latest stage of the commitment we made five years ago to give our employees the finest opportunities for learning in the financial services industry. -In this flux we have two fixed points. The first is the vision and values we adopted in the Bank's 1990 Strategic Plan. Although we review and renew our Plan, keeping it attuned to new times, I cannot imagine circumstances which would lead us to abandon or seriously modify our commitment to our four stakeholders - our shareholders, customers, employees and the communities in which we do business... We must of course continually find fresh ways to put our values into practice, but the values themselves are inherent in the very nature of what we do. -The second fixed point is our determination to take nothing for granted. We are endlessly curious about our environment - in business, technology and the community - about our own performance in relation to it, and about our preparedness with the right blend of competencies and capabilities. We are also acutely aware that somewhere someone, perhaps the proverbial inventor in a garage, has an idea that could transform the way we do business. We cannot know what that idea is, but we can shorten our response times and look continually and critically at the structures and received ideas we have inherited from the past. We seek continually to redefine our business systems and our workplaces. And we are also rethinking and re-imagining the relationships between the Bank and its customers, the Bank and its employees, and the Bank and the communities in which we work and live.

1995

-Banking is an inherently conservative business. Our depositors and our shareholders rightly prize stability, and we have put it at the core of our values. But the central paradox we face is that as the twentieth century ends, stability and sustained returns can only come from an open and inquiring mind. The tension between the maintenance of order critical to the care of other people's

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1996

money - and creative innovation must be skillfully managed if success is to be sustained in a financial services institution. -For the Bank of Montreal Group of Companies, 1996 has been a year of much solid achievement and many creative new departures, but in our long history it will be remembered for one initiative above all others. 1996 is the year we launched mbanx, an entirely new virtual banking enterprise designed to meet the needs of financially active consumers across North America at the highest standards of speed, convenience and service quality. Its concept is unique and its potential unlimited. With the founding of mbanx on October 16, we have planted an acorn from which a truly mighty oak will grow. -This message gives an account of how change is bringing higher expectations of our performance in every field, while the accompanying stories give examples of the groundbreaking initiatives that form our response. - We understand that in the midst of a technological revolution it is critically important to choose the technology, that best serves our customers' needs, as they define them. That is why we seek the creative blending of people and technology - of which mbanx is the prime example. Together, technological power and excellence in execution can give us banking free from the boundaries traditionally imposed by space and time. -Together with our capabilities in Canada and the United States, the strategic alliance with Bancomer makes us the first NAFTA bank. - Change is all-pervasive, but it is perhaps in the workplace that its effects are first brought home for most people Our response as a bank is to prepare a new contract with our employees, one that defines us as a learning organization. The paternalism of the past is being replaced by a professional relationship between the Bank and employees who are essentially independent entrepreneurs, with their skills as their capital. For those who welcome continuously expanding career horizons, and are prepared to take responsibility for their futures by investing in themselves, we are providing unprecedented opportunities for learning in every line of business. -The ground-breaking disclosure standards set by this Report have won major awards on several occasions.

Description and analysis As the above indicate, Mulhollands only reference to innovation in the MTSs studied appears in 1989. While reviewing some of the occurrences in the past decade, he mentions among other things the explosion of financial innovation. He speaks,

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however, in a general sense and does not refer specifically to BMO. It is mainly with Barrett that BMO is presented as an innovative bank, and this not before he had been in the chairmans position for three years. However, the above table indicates that with the years, more references are made to the banks being innovative and creative. In 1992, innovation and creativity are first mentioned. These labels appear in the opening paragraph and are associated with small business, a customer segment which had become the target of BMO. In the second quotation in 1992, a number of initiatives are mentioned, some of which refer to the banks progressive undertakings in comparison to the competition. Innovative pricing, implementing a pilot project, working with

emerging segments of the business community, becoming the bank of choice for knowledge-based, sunrise industries (generally known to be innovative) are all examples of the banks innovative stance. Furthermore, the importance of these steps or undertakings lies not only in the fact that each constitutes an innovation in itself, but that together they are a radical change in the way we do business. In other words, the innovation stands not only with respect to the competition, but also with respect to the banks recent history. This is a reference to the changes at the bank since Barrett took over the chairmanship, changes which are of a significant magnitude when put together. In 1993, the term first appears in its innovative sense. After listing a number of first moves historically undertaken by the bank, Barrett mentions the latest, continentwide banking. The latest innovation involves their North American strategy for the 90s, labeled Vision 2002 which is portrayed in the second quotation as our creative response to the integration of economies. In fact, the second quotation in 1993 makes three different references to the banks innovative stance: Vision 2002 is said to make BMO the first full-service organization to span North America, the bank is said to continue to innovate in Canada, and their strategy is said to be our creative response. It must be noted that references to changes and innovations are interspersed with references to continuity. After mentioning that Vision 2002 will make the Bank a North American financial organization, Barrett indicates that Canada will always be the banks home and priority market. Similarly, after mentioning that Vision 2002 is the

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banks creative response to the increasing integration of the worlds economies, he adds that We shall continue to be an international bank. In fact, the opening paragraph itself indicates that being first is a bank of Montreal tradition implying a continuity in leading change. In 1994, BMO is said to have a reputation as a bank that leads change and another series of firsts are mentioned: the listing on NYSE, bringing tools of financial planning to Canadians for the first time, and opening the Institute for Learning, the first such corporate facility in Canada. Of the events that occurred during the year, one is singled out as a reason for which 1994 will be remembered in the banks long history: The Institute for Learning which is said to be the first facility of its kind in the country. Yet, the IFL, which is said to be an undertaking of some scope, is also portrayed as the latest stage of the commitment we made five years ago. In other words, although it may appear as a major move, it does, in fact, show some continuity with the past; it is a continuation of the commitment the bank made to the employees before. Here again, as in 1992 and 93, we see that references to innovations and changes are often followed by references to continuity, so that the innovation is not portrayed as a major break with the past, but as a reflection of some pattern that has persisted. It is also noteworthy that in 1994 Barrett moves away from the notion of first as old and adheres to the notion of first as innovative. In 1995, after mentioning several major changes that have occurred in the banks environment (including the ideological divisions of the world, the capabilities of technology, our concepts of community etc.), Barrett indicates that the bank has two fixed points in the flux. The first is the vision and values adopted in the strategic plan in 1990 which, as will be explained later, outlined the banks commitment to each of the four stakeholders. The values themselves (the commitment to the four stakeholders) are said to be a fixed point in the flux, however, fresh ways must be continually found to put these values into practice, implying a renewal in practicing the commitment to stakeholders. This emphasis on continuous renewal which may be seen as a mark of the banks innovativeness, is reiterated in the second quotation in 1995. There the banks

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pursuit of change and innovation are mentioned whereby the banks determination to take nothing for granted is said to be a fixed point in the flux. In fact, we see the bank engaged in a proactive search for change and innovation as evident in the expressions: we are endlessly curious about our environment; we are also acutely aware that somewhere someone, perhaps the proverbial inventor in a garage, has an idea that could transform the way we do business; we can look continually and critically at the structures and received ideas we have inherited from the past; we seek continually to redefine our business systems and our workplaces; we are also rethinking and reimaging the relationships The references to the banks pursuit of innovation are many, yet this pursuit of innovation is an attribute which itself is persistent. The third quotation in 1995 addresses explicitly the stability/change and the maintenance-of order/creative-innovation paradox. Interestingly though, Barrett presents the need to be inquisitive as the condition through which stability can be maintained. Stability and sustained returns can only come from an open and inquiring mind. That there is a tension between the maintenance of order and creative innovation is explicitly mentioned, but the tension is one that can be skillfully managed. It is noteworthy that Barrett speaks about the need to manage the tension in a financial service institution and not at BMO in particular, indicating that the need to seek innovation is not specific to BMO, but a general condition for success in the industry. Clearly the 1995 MTS shows a continuity with the1994 MTS in the sense that BMO is portrayed as an innovative and creative bank that seeks change. These traits are portrayed as necessary for achievement of financial stability and success. This portrait of the bank as an innovative and creative organization continues with rigor in 1996 as is evident in the expression many creative new departures whereby each of the last three words in itself is an indication of innovation. mbanx, the latest creation, is said to have a unique concept again implying the banks innovation. The second quotation in 96 -and the last one as well - talk about groundbreaking initiatives and undertakings at the bank, again a sign of innovation. These innovations are the banks response to higher expectations brought about by change. The crux of the banks

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innovative undertakings in 96, is mbanx which exemplifies the creative blending of people and technology. This blending allows the bank to surpass the traditional boundaries imposed by space and time (third quotation). Another area of innovation in 1996 is the undertaking of the NAFTA strategy. Although this strategy shows some continuity with the past and is consistent with Vision 2002 previously announced in 1992, extending the banks position into Mexico brings additional change and makes BMO the first bank to cover all three countries. A third area of innovation and change in 1996 involves the banks relation with employees. In response to the many changes occurring in the environment, the bank is preparing a new contract with employees. This contract is one that defines the bank as a learning organization and the employees as entrepreneurs, both terms often used in conjuction with the ability to create and innovate. Finally, a fourth area of innovation is its disclosure standards, an innovation that has won major awards on several occasions. In brief, different areas of innovation are mentioned in 1996: mbanx whose concept is unique and which represents the creative blending of people and technology, the pursuit of the NAFTA strategy, redefining the relationship with employees, the disclosure standards adopted by the bank. In summary, we can note that the innovation theme which is mentioned by Mulholland in reference to financial products in general, does not re-appear in the MTS again until 1992 when it persists and becomes more frequent. As of 1992 the MTSs are rich in references to: invention, innovative, creative, first, ground-breaking, new, departure, learning, and the pre-fix, re applied to defining, thinking and imaging. As the years go by, the areas in which the bank demonstrates innovation and creativity become more numerous. In fact, some references to innovation relate to the bank in general, whereas others relate to specific undertakings of the bank.

5.2.2.d North American Another theme which appears in BMOs self-definitional discourse relates to its North American scope. The bank refers frequently to its North American posture which,

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in some ways, is distinctive with respect to other Canadian banks. The table below provides the quotation on the North American theme. Table 10. North American -The Harris acquisition has proceeded smoothly and is living up to our expectations Since it is not intended to integrate management, the emphasis will be upon defining the respective organizational roles and markets, establishing goals, and building the spirit and habit of teamwork upon which an effective and well-coordinated overall performance depends. In this way, we expect to maximize the potential inherent in this strategic association. - We welcome the added assurance which ratification of the trade agreement brings and expect to continue to expand and rationalize our U.S. business. At least as important, however, is the benefit to our Canadian business which stems from our unique position in the United States. Canadian customers desirous of exploiting opportunities in the United States will find that we are able to place at their service a unique capability, embracing a full range of quality banking services in both countries, accessible to them through a single Canadian-based banking relationship. - As the only bank with full service capability in Canada and the U.S., we have a distinct competitive advantage in North America. We intend to build sensibly but aggressively on that platform. -In June we announced our North American strategy for the 1990s, Vision 2002. By the early years of the new century it will make us the first full-service financial organization to span North America. Canada, of course, will always be our home and our number one market. We shall invest, innovate, and compete more vigorously than ever in this country. At the same time, when we look south of the border we see that the vast American market is a natural extension of our home market The United States is a market with a potential for steady growth that cant be profitably matched anywhere else. When we look in the other direction, Vision 2002 becomes a strategic initiative to meet the certainty, sooner or later, of increased competition from American banks in the Canadian market. Unless Canadian financial service institutions are able to offer fullservice banking in both countries, they may find themselves at a serious competitive disadvantage - and miss an exceptional opportunity for growth. -our North American strategy is both an exhilarating new departure, with immense promise for all our stakeholders, and a natural development from our proud Canadian past. It's an old tradition - and a real first. And that's as it should be, for Canada's first bank. - In the same five years, we have consolidated our position as the only financial group to offer a full range of services across Canada and in our chosen markets in the United States. In 1994 we strengthened that position by acquiring Suburban Bancorp Inc. of Chicago and merging it with Harris, our United States

1985

1988

1990

1993

1994

85

bank, under the Harris name, bringing us much closer to our goal of a 120branch network in Greater Chicago. And we became the first Canadian bank ever to be listed on the New York Stock Exchange - a clear signal of our lasting commitment to the North American market. -Our North American base and our responsiveness to the communities in which we do business have stood us in good stead as our international reach has grown in the nineties And by acquiring Burns Fry Limited and merging it with Nesbitt Thomson in September 1994 as Nesbitt Burns Inc., we not only forged the pre-eminent Canadian investment firm but also created a powerful base for our planned expansion into selected markets in the United States and overseas. -In the six years we have earned these returns, virtually all the goalposts and finish lines have been moved... The rules of international trade and investment. The regulation of the financial services industry, in North America and worldwide - and the look of the North American industry as it undergoes an unprecedented wave of consolidation -1996 is the year we launched mbanx, an entirely new virtual banking enterprise designed to meet the needs of financially active consumers across North America at the highest standards of speed, convenience and service quality. -A world with fewer boundaries also means that more and more of our clients expect us to serve them wherever they require financial services. This is especially, true in North America, where Canada does almost 80% of its trade and where NAFTA is making political boundaries across markets less and less relevant. Our response has been decisive. In March 1996 we reallocated our exposure to Mexico without increasing it, exchanging our sovereign risk involvement for a 16% equity stake (20% voting interest) in Grupo Financiero Bancomer, Mexico's finest financial services organization. Together with our capabilities in Canada and the United States, the strategic alliance with Bancomer makes us the first NAFTA bank. The Bank of Montreal Group of Companies is now uniquely, positioned to take part in the rapid growth of trade and investment among all three NAFTA partners. And as mbanx realizes its full potential in the United States and Mexico, continent-wide cross-border banking will be a reality readily available to all our customers. -Geographic diversification has centered mostly in the United States, followed by Mexico and, to a much lesser extent, selective markets in East Asia.

1995

1996

1997

Description and analysis In 1984, BMO had acquired the Harris Bank in the United States. It was a major acquisition which gave BMO access to retail branch operations in the United States. This acquisition is referred to by Mulholland as a strategic association in 1985. Later, in 1988, he talks about BMOs unique position in the United States. This unique

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capability includes a full range of quality banking services in both countries, Canada and the U.S. Both, the uniqueness of the North American posture and the banks ability to provide full services across both countries will reappear in later years in association with each and as self-defining elements. In fact, the banks uniqueness stems not simply from operating in the U.S nor from its offering a full range of services. BMOs uniqueness stems from the combination of the two: a full-range of services in the United States. BMO was the only bank to own a retail branch banking subsidiary in the U.S., conferring on it a mark of distinctiveness among other banks. In 1990, Barretts discourse on the bank shows a continuity with Mulhollands: BMO is presented as the only bank with full service capability in both countries. This is considered a mark of distinctiveness and a source of competitive advantage. The 1993 MTS is devoted almost exclusively to the banks North American posture and strategy, which indicates the centrality of the North American theme to BMO. In this MTS different labels are used to talk about the North American theme: North American strategy, Vision 2002. In the first quotation, their North American strategy is labeled Vision 2002. Note the futuristic tones in this label. By the early years of the new century, it will make us the first full-service financial organization to span North America is a statement that joins again two major identity themes: first and full-service financial institution in North America. As usual, however, in announcing some change or innovation at the organization, Barrett immediately addresses some element of continuity: Canada, of course, will always be our home and our number one market. Barrett then presents the American market as a natural extension of our home market, thus minimizing the scope of the change undertaken. A number of arguments are made in this quotation to justify the need to pursue the North American strategy, among which is a reference to the ability of Canadian financial services institutions, in general, to offer full service banking in both countries, a condition for attaining competitive advantage and growth. In other words, expanding into the U.S. market is a strategy that ought to be pursued by all Canadian financial institutions if success is to be attained. In a sense we see a discursive strategy similar to Mulhollands regarding the

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Canadian financial services industry. And to conclude, Barrett comes back to a variation of the theme of change and continuity at the Bank, for while exhilarating new departure and real first are signs of innovation and change, a natural development from our proud Canadian past and an old tradition indicate a continuity with the past. In 1994, we are told that the bank consolidated its position as the only financial group to offer a full range of services across Canada and the United States by making an acquisition in the U.S. During this year as well, BMO became the first Canadian bank ever to get listed on the NYSE, further strengthening the NA stance. In this last statement, we see again that the BMO is said to be first in undertaking such a move. This is another occurrence of the association of two major identity themes innovative and North American. In 1994 the banks base and capabilities are now said to be North American and not Canadian. In fact, as of 1994, most references to Canada are followed by references to the U.S. The banks geographic scope is often mentioned to be of a North American scale. Interestingly, even the acquisition of Burns Fry which is said to create the pre-eminent Canadian firm is portrayed as providing the bank with the opportunity for expansion in the U.S. North America as the reference group continues into 1995 whereby in addressing the changes that have occurred in the financial services industry, the industry in North America (and not in Canada) is mentioned. In 1995, there is an almost complete shift to North America from Canada. This is also apparent in 1996 where consumers whose needs are being met by mbanx are those across North America. Consumers across North America are seen as a single mass or group. In the second 1996 quotation, the banks customers in the three major countries of operations (Canada, the U.S. and Mexico) are referenced separately, but the quotation concludes with reference to mbanx providing the opportunity for continent-wide, cross border banking. In this quotation, we see an alternation of references between North American and NAFTA. In fact, BMO is said to be the first NAFTA bank and not just a North American bank with operations in Canada and the U.S. The bank has made a major investment in Mexico and is now pursuing a NAFTA strategy. We thus see that the

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banks geographic posture evolves from Canada to North America to NAFTA. 1997 brings a re-affirmation that the banks diversification and expansion priorities include first the U.S. and then Mexico, indicating further intention to consolidate the NAFTA position. In summary, we see that the banks full-service capabilities on a North American scale are portrayed as a mark of uniqueness and distinctiveness and that self-reference shifts from Canadian to North American to NAFTA. Vision 2002 was an expression of the banks strategic intent to pursue a North American strategy and its acquisition of Suburban Bancorp lent substance to this intent. The launching of mbanx and the additional investment in Bancomer in Mexico, further propelled the banks geographic scope to include Mexico, allowing BMO to call itself a NAFTA bank.

5.2.2.e Commitment to Stakeholders One way BMO defines itself is as an institution committed to its stakeholders. This commitment is mentioned at times in relation to all four stakeholders and at others in relation to a particular stakeholder group. In 1986, a full page in the annual report entitled A Commitment to People: The Bank of Montreal Tradition outlines the foundations of the banks general commitment to people and then spells out the banks commitment to each of its four interest groups - customers, shareholders, employees and the community - in a separate section. In 1990, the year Matthew Barrett became the chairman of the board of directors, two pages in the annual report precede the MTS. The first is entitled Vision and the second is entitled Values. In these two pages the banks philosophy as well as values, which are articulated in reference to the four stakeholder groups, are outlined. Later, the 1994 MTS is dedicated to reviewing how the alleged commitment had been fulfilled and this commitment is further re-affirmed. The commitment to stakeholders (all four of them) theme is discussed below. Quotations are provided in the table below. Commitment to the individual stakeholder groups will then each be discussed in separate sections. The quotations related to the commitment identity themes have been taken from three sections of the annual report:

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the MTS, the 1986 A Commitment to People, and the 1990 statements of Vision and Values. Quotations taken from the latter two are identified as such. All unreferenced quotations have been taken from the MTS. Table 11. Commitment to stakeholders -Our business rests, more than most other businesses, on public confidence, not just in our financial stability but also in our integrity and fairness and in our ability and willingness to perform the roles which society expects of us. The preservation of a bank as a healthy, growing institution and its capacity to serve the interests of its shareholders, customers and employees depends greatly upon the preservation of this supportive consensus. -From A Commitment to People: The Bank of Montreal Tradition: A commitment to people - customers, employees, shareholders and neighbours has been a cornerstone of our reputation since Bank of Montreal first opened its doors as Canadas first permanent financial institution in 1817. While the Bank has changed dramatically in the intervening years, its commitment to its own people and those it serves has remained constant. Our founders commitment to ethical business practice, high professional standards and responsible conduct has also endured. Together these principles have guided us through more than a century-and-a-half of growth and expansion Today, as in the past, (we are committed to our customers, employees, shareholders and the communities where we live and work) We are proud of our traditions and our place in history. From our predecessors we inherit an institution of stability, strength and character. On this foundation we can build confidently for the future. -As a result of ethical lapses and of an over-emphasis upon short-term gain, the social contract, and the basic trust between business and society, is under increasing pressure. We must ensure, therefore, that ethical principles and concern for the well-being of our customers, employees and shareholders, as well as for the public, are integral components of every business relationship. -From Vision: Our Philosophy: We are dedicated to excellence in everything we do, to meeting or exceeding the performance expectations of our principal constituencies- customers, employees, the community and shareholders. -From Values: Our values are what each of our stakeholders can expect of us. -At Bank of Montreal, our goal is to provide a distinctive level of service to our customers, without whom we could not succeed. But our success also depends on how we meet the needs of our employees, the communities we serve, and our shareholders. Together, these groups constitute the Bank's "stakeholders" those who have a stake in our business.

1986

1988

1990

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1993

1994 1995

-Our stakeholders are interdependent. By serving each, we serve all. -our North American strategy is both an exhilarating new departure, with immense promise for all our stakeholders, and a natural development from our proud Canadian past. -We define our values in relation to our four stakeholder groups -In this flux we have two fixed points. The first is the vision and values we adopted in the Bank's 1990 Strategic Plan. Although we review and renew our Plan, keeping it attuned to new times, I cannot imagine circumstances which would lead us to abandon or seriously modify our commitment to our four stakeholders - our shareholders, customers, employees and the communities in which we do business. The needs of these constituencies are the driving force shaping and informing our approach to the business of banking. We must of course continually find fresh ways to put our values into practice, but the values themselves are inherent in the very nature of what we do. -And as you read, I hope you will see how banking without boundaries means a brighter future for all our stakeholders - our customers, communities, employees, and especially, our shareholders, who stand to benefit the most as we welcome the challenge of expanding horizons. -Yet as always amidst all the changes there will be a powerful element of continuity. The values of integrity, accountability and respect for human beings that permeate all our strategies will not change. They will be the foundations of a bank where all the factors of production work in harmony to shape an enterprise that continuously builds on its own success for the benefit of all stakeholders. Steady, sustainable growth, for example, will help us attract and retain the best employees, who as they come to know their long-term customers will learn how to add more value, reduce costs and improve service quality. Higher productivity will release resources to invest in extraordinary levels of training and development, reinforcing employee productivity, compensation, growth and loyalty. These in turn will produce a cost advantage difficult to match, while yielding the steady profits that appeal to long-term, value investors and lowering the cost of capital for further investment in the creation of wealth. Such a bank is an immensely valuable partner for the communities in which it does business. To work in it is always challenging, but also rewarding and enjoyable. It is a bank in which the interests of all stakeholders are in harmony, and which contributes to the creation of wealth for shareholders and for society at large.

1996

Description and analysis In 1986, Mulholland indicates that serving the interests of the shareholders, customers and employees of a bank depends greatly on public confidence, confidence in

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the financial stability, integrity, fairness and willingness of the bank to perform the roles society expects. As is typical of Mulhollands discourse, BMO is not addressed specifically, rather reference is made to a bank. Another section of the 1986 annual report, however, places emphasis on BMO in particular. This section indicates that fulfilling the financial, ethical and social responsibilities are components of BMOs commitment to four groups. This commitment to people appears as a major self-

defining element of the bank since it is said to be a BMO tradition, a cornerstone of our reputation since the bank first opened its doors and a constant despite the dramatic changes at the bank. The ethical business practice, high professional standards and responsible conduct which were upheld by the banks founders have also endured. An association is made here between a commitment to the banks four stakeholders and a commitment to ethical and professional business conduct. In a later section of this same text, the banks commitment to each of the four stakeholders is spelled out and such commitment is couched mainly in terms indicating fairness, duty, and social responsibility. Ethical principles are not only enduring at the bank, and should be at other financial institutions, they are also central as the 1988 quotation indicates. Ethical principles and concern for the well-being of the four stakeholders should be integral components of every business relationship. In short, the banks commitment to people is an enduring attribute. This

commitment is exercised by adhering to ethical business conduct which is a central requirement for BMO (and should be for other financial institutions). In other words, this commitment is a self-defining attribute which has normative implications for the bank. Barrett makes the commitment to stakeholders theme a central one in his first annual report to shareholders in 1990. The banks philosophy (which constitutes a part of the Vision statement) as well as its values are articulated in terms of what the bank is willing to provide the stakeholders and what the latter can expect of the bank. In fact, both the philosophy and values statements go into the details of the banks relation with each stakeholder group as will be shown later. Furthermore, the 1990 MTS starts by attributing success to customers, employees, communities and shareholders, although

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primacy is given to customers. Barrett calls these four groups the Banks stakeholders those who have a stake in our business - a label which was not used in the MTSs signed by Mulholland. Barrett thus introduces into the banks discourse a term which will be often referred to in subsequent years. The expectations of each of the four stakeholders from the bank are articulated and their interests are said to be interdependent. By serving each, we serve all, is an implicit indication that the interests of these four stakeholders are not divergent, but rather compatible. The 1990 MTS, the first signed by Barrett as Chairman, re-establishes the banks commitment to the four stakeholders, individually and collectively, as a self-defining attribute of the bank, showing a continuity with Mulholland, although the commitment to each of the four stakeholders spelled out during Barretts tenure differs in some ways from that spelled out during the Mulholland years. This commitment to stakeholders is reiterated in later years. For example, 1993 re-affirms that the banks North American strategy - which is partly presented as a new departure - will be beneficial for all stakeholders. In fact, in this as in later years (for example, 1996), references to new developments at the bank are said to be advantageous to all stakeholders. Reassuring all stakeholder groups that they stand to gain from changes at the bank provides justification for undertaking such changes. The 1994 MTS is devoted to a review of the banks undertakings during the previous five years which correspond to Barretts chairmanship of the bank. The banks values are said to be defined in terms of the relation to the four stakeholders, a reiteration of what was mentioned in the annual report issued during Barretts first year as Chairman. 1994 thus shows a continuity in the articulation of the banks commitment. In 1995, after having enumerated a number of major changes that had occurred in the banks environment during the past years, Barrett indicates that the fixed points in the flux are the vision and values adopted in 1990, and the banks determination to take nothing for granted. Recall that the vision and values centered around the banks relation to the four stakeholders. The needs of these stakeholders are central, they are the driving force shaping and informing our approach to the business of banking. The

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banks commitment to the stakeholders is also enduring: it is said to be fixed. However, how this commitment is practiced may change as indicated in we must continually find fresh ways to put our values into practice. In fact, it is clear that some fresh ways are found in 1996. In 1996, banking without boundaries is said to mean a brighter future for all our stakeholders and especially our shareholders. Interestingly, the shareholders are singled out as the group standing to gain the most as the bank expands its horizons. This stands in contrast to the overriding emphasis the bank placed on customers back in 1990 when the vision and values were articulated. As is common of other MTSs signed by Barrett, mentions of change and new strategic initiatives are followed by references to some element of continuity. In the third quotation, the values of integrity, accountability and respect for human beings that permeate all our strategies are said to be constant. In fact, this brings back a theme (integrity) that was articulated by Mulholland, appeared in Barretts first MTS in 1990, and was dropped thereafter from discourse. These values are said to be the foundations of the bank that continuously builds on its own success for the benefit of all stakeholders, and a virtuous circle linking the needs of different stakeholders is elaborated. The quotation ends, however, with an emphasis on the benefits to be derived by shareholders in particular, and society at large in general. This again indicates an overemphasis on the shareholder group. In brief, we see with Mulholland a commitment to people implying integrity and social responsibility as a self-defining attribute of the bank which has endured since the founding days. This commitment to people becomes articulated as a commitment to stakeholders with Barrett in 1990. It is referred to in 1993 when major undertakings occur at the bank and is re-affirmed in 1994 when the accomplishments of the first five years of Barretts tenure are reviewed. In 1995, this commitment is said to be a fixed point in the flux, although the relationship with the stakeholder groups is affirmed to be continually re-thought. In fact, the banks commitment to customers which seemed to have taken primacy in 1990 eventually gives way to a predominant commitment to the

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shareholders in 1996. As the forthcoming sections will indicate, the relationship with the different stakeholder groups do get re-thought throughout the years. In the next pages, the banks commitment to each of the four stakeholder groups will be discussed in turn. Let us start with the customers.

Commitment to customers The following table provides the quotations related to the commitment to customers theme. Table 12. Commitment to customers -One myth holds that we are big and therefore bad. A more realistic view would be that the security and stability which size can bring are based on our traditional and continuing service to the smallest as well as the largest customers. -Automation is necessary not only to maintain an efficient operation, capable of providing service of acceptable quality at a reasonable cost, but it is also essential to maintain adequate control. -From A Commitment to People: We are committed to our customers: Every individual with whom we deal is respected, fairly treated and served to the best of our ability. In upholding the public trust vested in us, we will protect our customers deposits and honour their privacy. -One of the Bank's objectives is to provide convenient, accessible options for Canadians of modest means to invest a portion of their savings in the economy without being exposed to undue risk. Another is to provide financially active Canadians with access, through a single contact point, to transactional, savings, credit, securities market, safekeeping and record keeping services. -The opportunities afforded by deregulation also present formidable challenges for financial institutions. Customers will have a greater level of personal choice in the selection of financial products and in the financial institutions that provide them. Thus, one legacy of deregulation is the need to be better informed about what our customers want and be prepared to respond with appropriate products of a high quality delivered to the highest service standards. -There should be no fundamental difference between the values of the marketplace and those we apply to other aspects of our daily lives. These include honesty, fairness, a decent respect for the standards of society, and

1985

1986

1988

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1989

acceptance of the obligation to give value and useful service in return for the rights and privileges which we enjoy and for the trust placed in us by our fellow citizens. -This past decade has witnessed dramatic growth and significant structural changes in international financial markets .(leading to the) explosion of financial innovation and a chronic oversupply of financial services. These changes have forced banks to seek new ways to add value to their customer relationships. -From Vision - Our Philosophy: We will provide customers with value, quality, a distinctive level of service and high ethical standards in all our dealings with them. -From Values: Our customers come first: They will be served at all times by friendly, caring responsive and well-trained employees. Our service will be characterized by fairness and respect, professionalism, integrity and ethical conduct. Employee satisfaction leads to customer satisfaction -At Bank of Montreal, our goal is to provide a distinctive level of service to our customers, without whom we could not succeed. But our success also depends on how we meet the needs of our employees, the communities we serve, and our shareholders. -Rigorous cost control measures held non-interest expense growth to 5%. This was achieved despite a substantial increase in technological, training and other investments to improve service quality. -We deal with more than 320,000 small businesses across Canada, and we know beyond doubt how important they are to us When we adopted our Corporate Strategic Plan three years ago, we put small business firmly front and center among our priorities for the Bank. -Today, we are making that commitment a reality, in the teeth of the longestdrawn-out recession most of us can remember. The recession has not changed our credit practices. Our goal remains a supportive credit environment - Supporting small business and agriculture means paying attention to what our customers want and, whenever possible, giving it to them... We are the only bank to offer a Small Business Lending Rate tracking 1% below prime... And we are working hard with governments to create a more effective legal and regulatory environment for small business...Each of these actions is a small step forward in itself. Together they are a radical change in the way we do business. And the results are showing. In a contracting market for small business credit, our market share has risen by 2.3% in just two years. Better yet, we have done this without lowering our high standards of creditworthiness and asset quality.

1990

1992

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1994

These are achievements of which we are rightly proud, even as we recognize that it is our small business customers who have made them possible. This annual report is our thanks to them. -We owe our customers the highest standard of service, professionalism and added value. -Let me review briefly some key achievements of this strategy in the last five years and in 1994 in particular. We have customized Personal and Commercial Financial Services to meet the unique needs of 234 communities across Canada. Our customers have rewarded us with substantial growth in market share, especially in the independent business sector, where we are now the highest-rated bank in Canada. In 1994, we moved to build on that achievement by creating the Institute for Small Business, which will allow our independent business customers to learn from us while we learn from them. -In five years, we have established a reputation as a bank that is sensitive to the evolving needs of our customers and employees. 1994 brought excellent examples. Our It is Possible marketing campaign made the tools of basic financial planning available to all Canadians for the first time. -Although we review and renew our Plan, keeping it attuned to new times, I cannot imagine circumstances which would lead us to abandon or seriously modify our commitment to our four stakeholders -Our depositors and our shareholders rightly prize stability, and we have put it at the core of our values. 1996 is the year we launched mbanx, an entirely new virtual banking enterprise designed to meet the needs of financially active consumers across North America at the highest standards of speed, convenience and service quality. -The evolving needs of our customers are the principal force for change in financial services today. In personal banking, demographic trends are bringing us mature customers who are experienced and knowledgeable, with wider perspectives and more complex needs We are committing more and more electronic and human resources to building relationships tailored to our individual customers - relationships whose core is first-class professional financial advice. mbanx, with its easy, low-cost access to all our electronic distribution channels and its individual portfolio managers for every client, embodies both these strategies. -Sensitivity to our customers needs is paralleled by our response to the rising standards that communities are setting for corporations everywhere. -As customers demand for financial services grows in intensity and sophistication, your Bank is constantly seeking ways to meet or exceed their expectations.

1995

1996

1997

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Description and analysis In 1985, Mulholland indicates that providing service to customers, regardless of whether they are small or large, is a matter of tradition and continuity at the bank. Furthermore the service provided by the bank is said to be of acceptable quality; the banks service to customers does not appear as distinctive. In 1986, the banks commitment to customers is manifested in the banks respect, fair treatment, service to the best of our ability, deposit protection, and privacy honouring. In fact, some of this commitment emanates from the public trust vested in the bank. In other words, part of the banks commitment to customers is a social responsibility. That the banks relationship with customers is a matter of social responsibility is again re-iterated in 1988 where there is talk about the obligation to give value and useful service in return for the rights and privileges which we enjoy and for the trust placed in us by our fellow citizens (third quotation). The banks relationship with the customer thus has normative

overtones. It goes beyond an instrumental, business relationship and involves a moral responsibility and obligation towards the fellow citizens. However, the relationship is also an issue of strategic importance. Deregulation has brought a challenge for financial institutions as customers will have greater choice in the selection of services and the institutions that provide them. There is thus, a need to be better informed about customers wants and to respond with products of a high quality delivered to the highest service standards. The instrumental aspect of being informed about customer wants and meeting these wants appears in this statement. It is also noticeable that the qualifiers used here are stronger than those used in 1985. Thus, products should be of a high quality, and should be delivered to the highest service standards. In 1988 as in 1985, Mulholland addresses two classes of customers, namely Canadians, who are catered to by the bank: those of modest means and those who are financially active. 1989 shows a continuity with 1988 in that a number of major changes are said to have forced banks to rethink their strategies including the search for new ways to add value to their customer relationships. Again here, catering to customers appears as a matter of

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necessity. Furthermore, in a typical manner, Mulholland, talks about banks and financial institutions in general and not about BMO in particular. In 1990, the annual report was prepared under Barretts chairmanship of the board. The commitment to customers addressed in the Vision statement reiterates some of the sub-themes articulated by Mulholland including value, quality and high ethical standards. Some new issues not addressed by Mulholland surface as part of the banks commitment to customers such as a distinctive level of service. In addition, employees, another stakeholder group, appear subordinated to customers. The opening statement of the MTS indicates that it is the banks goal to provide a distinctive level of service to the customers who are said to be a major reason for success. Here again, the customers appear as having priority over the other stakeholder groups which are addressed jointly in the second statement. Later, we are told that the bank had made major investments intended to improve service quality, implying that the quality of service was not at its best. In other words, 1990, re-iterates many of the customer sub-themes put forth by Mulholland. Barrett, however, introduces the notion of distinctiveness in customer service as a goal for the bank. He also attributes success mainly to customers, as is evident in a number of quotations. In other words, with Barrett, the customer theme takes more centrality, and distinctiveness in customer service becomes a goal at the bank. The emphasis on customers underlying the banks success continues in 1992. In fact, the 1992 MTS is dedicated almost exclusively to the small business customer segment who were placed firmly front and center among the banks priorities in the Corporate Strategic Plan. The banks commitment to small business has remained constant despite adverse factors in the environment (second quotation). Continuity in the banks commitment to and practices towards the small business customer segment is emphasized. The banks attentiveness to customer wants and needs is reiterated in the third quotation. A variety of steps taken by the bank to meet these wants and needs, some of which are said to be distinctive to the Bank, are outlined. Noteworthy among these distinctive procedures is the banks Small Business Lending rate which for over a year

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was one of the lowest in the country. Each of the procedures used by the bank in meeting the needs of small business customers is a small step forward, but together they are a radical change in the way we do business. This last statement allows us to conclude that the change is radical with respect to the banks past ways of doing business. In fact, it is a near past (since Barretts ascendance to the chairmanship and the banks adoption of the Corporate Strategic Plan). The rise in the banks market share refers to the previous two years. The MTS ends with the attribution of success to the small business customers which is a variation on the customer leads to success issue previously mentioned in 1990. In brief, 1992 shows a continuity in the commitment to customer theme with emphasis on a particular customer segment - small business - which gained in strategic importance since Barretts mandate as chairman. The 1994 MTS is dedicated to a review of the banks achievements during the previous five years and to a re-iteration of the banks commitment to the four stakeholders. The commitment includes owing customers the highest standards of service, professionalism and added value which reiterates aspects of the commitment mentioned in 1990. Interestingly, though, this commitment does not refer to fairness and integrity which were mentioned in 1990 by Barrett and before that by Mulholland. In this respect, Barrett appears to be diverging from some of the major sub-themes articulated earlier. Some of the achievements during the first five years of Barretts tenure are also outlined. Part of the banks success is again attributed to customers who are said to have rewarded the bank with growth in market share in the small business sector in particular. Here the banks distinctiveness in the sector of independent business is emphasized as the bank is said to be the highest-rated bank in Canada. In an effort to further consolidate this distinctiveness, the bank builds the Institute for Small Business thus allowing both, the bank and the customers to learn from each other. The last quotation in 1994 indicates that the bank has established a reputation for, among other things, being sensitive to its customers needs. An example of this sensitivity is that the bank has provided Canadians with basic financial planning tools for the first time. Here the first theme is joined to the customer service theme.

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In 1995, the MTS addresses a number of major changes that have occurred in the banks environment and this is followed by a reference to the fixed points at the bank in the flux, i.e. continuity in a time of change. This continuity refers to its commitment to the four stakeholders among whom we find the customers (who in this case are not singled out). The relationship with these stakeholders may be redefined and re-imaged, but the banks commitment to them will remain. In the second quotation, the banks values are said to derive from what is prized by depositors (customers) and shareholders, namely stability. Here we see that depositors (a customer segment) are placed at par with the shareholders in influencing bank values. In 1996, the bank launches mbanx which is defined in terms of meeting customer needs. More specifically, it caters to the needs of financially active customers across N.A. at the highest standards of speed, convenience and service quality. The expression financially active designating a group of customers was used by Mulholland in 1988 in speaking about one of the banks objectives. Then, Mulholland distinguished between Canadians of modest means and financially active Canadians. It is also noteworthy that emphasis is placed on the highest standards of speed, convenience and quality echoing the few superlative qualifiers of customer service used at BMO. The second quotation in 1996 indicates that the evolving needs of customers are the principal force for change in financial services. Customer needs are attributed a causal force for change. This is a more forceful role which is attributed to customer needs than was common with Mulholland. The latter indicated in 1988 that deregulation led to a higher level of customer choice and in 1989 that technological change had an impact on customer expectations. For Mulholland, deregulation and technology were pushing the changes in customer needs which, in turn, created the necessity for banks to readjust their strategies. With Barrett, customers themselves are said to push the changes, and

technology provides a means to satisfy these needs. Customers, who in 1996 are said to be mature, experienced, knowledgeable and to have more complex needs, seem to take a more central role in discourse since Barrett took over. Advanced research and segmentation techniques are used to understand customers and the right blend of

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technology and people is sought in other to meet customer expectations. In fact, the whole concept of mbanx is centered around meeting individual customer needs. The banks sensitivity to customers needs is reiterated. In 1994, the bank was said to have established a reputation for such sensitivity. The quotation in 1997 addresses shareholders directly and informs them that their bank is constantly seeking ways to meet or exceed (customer) expectations. This underscores the centrality and the strategic importance that the bank grants to meeting customer needs and expectations. In brief, we see that the commitment to customers (and fellow citizens) which was portrayed as part of the banks social responsibility and moral obligation with Mulholland, and which involved providing service of acceptable quality (1985) and protecting customer desposits and privacy (1986), becomes part of the banks vision and values with Barrett in 1990, but with some different terms. Then, the banks goal is said to be to provide a distinctive level of service and customers seem to have primacy over other stakeholder groups. In 1992, a customer segment, namely small business, is singled out as the subject of the annual report and the banks distinctive service to this customer group is outlined. In 1994, BMO is said to be the highest rated bank in Canada in the small business sector. During 1994 as well, when the banks commitment to customers is re-affirmed, this commitment makes no reference to the protection of customer deposits. By then, BMO is said to have established a reputation as a bank that is sensitive to the needs of its customers. The 1996 statement places particular emphasis on meeting the needs of financially active consumers, whom mbanx - a major bank development -was targeting. This is portrayed as an instance of the banks sensitivity to customer needs.

Commitment to shareholders Table 13. Commitment to shareholders -From A Commitment to People: We are committed to our shareholders: We have a duty to our shareholders to optimize the return on their investment, and through prudent management, to maintain the continued prosperity of the Bank. -Faithful attention to (the fundamentals of prudent management) will provide

1986

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1990

added assurance that the Bank and its shareholders will not only be protected against the impacts of the inevitable adverse developments but will also be wellpositioned to take advantage of the opportunities which the future will bring. -From Vision - Our Philosophy: We will provide shareholders with an attractive and continuing return on their investment. -From Values: We manage the Bank on behalf of our shareholders: Our first responsibility to them is to provide sound , responsible management and to keep them fully informed. We will be responsive to emerging threats and opportunities, and will invest - or divest - accordingly. We will maintain a prudent risk profile and a strong credit rating to protect shareholder investment. Shareholders can expect to see their investment steadily increase in value and achieve an annual return that is competitive with other banks. -It is to them - our customers and shareholders - that in no small measure we continue to owe our success. -We reported our fifth consecutive year of record earnings, while sustaining our solid and consistent return on equity. Overall, our financial track record for the nineties places us firmly among the top-performing major banks in Canada and the United States. -Our shareholders are entitled to a competitive rate of return and the prudent management of their investment. -In 1995 Bank of Montreal reported net income of $986 million for our sixth consecutive year of record earnings. Naturally, we are encouraged by this achievement. But we are particularly gratified that 1995 is also the sixth consecutive year in which we earned a return on equity of over 14%; in fact, our annual ROE was the Bank's highest in six years. We are one of only two North American banks in our peer group to achieve these resultsFor me, however, the real meaning of our 1995 results is that we are fulfilling our commitment to give our shareholders a solid and, above all, a consistent return on their investment. We made that commitment when we adopted our Corporate Strategic Plan in 1990, just as the business cycle began to turn down. We kept it through the worst days of the recession, and we are keeping it in today's more prosperous times. We will do everything we can to maintain our record, because earning a consistent return is fundamental to our whole business strategy. -Although we review and renew our Plan, keeping it attuned to new times, I cannot imagine circumstances which would lead us to abandon or seriously modify our commitment to our four stakeholders -Our depositors and our shareholders rightly prize stability, and we have put it at the core of our values. -It is the Bank of Montreal Group of Companies' decisive response to those

1991

1994

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possibilities that makes our shares an investment to buy and to keep. Elsewhere in this Report, you can read about the seven consecutive years of record profits which show how effectively our Bank has been managing the drivers of change in the 1990s.And as you read, I hope you will see how banking without boundaries means a brighter future for all our stakeholders - our customers, communities, employees, and especially, our shareholders, who stand to benefit the most as we welcome the challenge of expanding horizons. -The ground-breaking disclosure standards set by this Report have won major awards on several occasions. Increased disclosure also goes naturally with effective corporate governance... It is an important guarantee that our shareholders can not only profit from their company, but be proud to own a part of it. Yet we remember that we are first and foremost a commercial enterprise, with an overriding responsibility to create wealth for our shareholders. We have a stakeholder strategy, because we believe it is the most effective shareholder strategy. -For the management of the Bank, year-end brings with it the obligation to give the fullest possible accounting of the initiatives and events that produced growth in shareholder value, as well as opportunity to report on plans for sustaining the creation of shareholder wealth in the future. The pages that follow in this Annual Report and the extensive disclosure contained in the Management analysis of operations section combine to assure that shareholders are well informed. -Fiscal 1997 saw the bank of Montreal Group of companies report record earnings for the eighth consecutive year, 11.7% above the level in 1996. Return on equity (ROE) was 17.1%. Your Bank is the only major bank in Canada and the United States to have produced ROE exceeding 14% for the last eight years. As a result the market value of your Bank at year-end rose to $15.9 billion - a gain of $5.4 billion for the year. -During the severe recession of the early 1990s, your Bank achieved record earnings, while some of our competitors stumbled. This was due in part to the risk management disciplines already in place, which we have continued to refine. Several experts in these fields have recently judged your bank to be on the leading edge of contemporary risk management capabilities. Description and analysis In the MTSs signed by Mulholland there are very few references to shareholders as a separate interest group. In 1986 and 88, shareholders are one of the three or four groups whose interests should be looked after by the bank (see the commitment to stakeholder theme analyzed before). In A Commitment to People, the banks duty

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towards shareholders centers on optimizing their ROI, and through prudent management (maintaining) the prosperity of the Bank. Prudent management as a requirement for the protection of shareholders is again re-iterated in 1989. During Mulhollands tenure, the banks commitment to shareholder could be summarized in the duty to provide a prudent management style as well as to provide optimal returns. With Barrett, the banks commitment to shareholders includes providing not only, an attractive but also a continuing return on investment which they can expect to see steadily increase in value and which is competitive with other banks. The bank is also committed to maintaing a prudent risk profile. This latter statement shows a continuity with Mulhollands articulations regarding protecting shareholders in 1989 (and all interest groups in 1985, 86 and 88) through prudent management. Another of the banks commitments to shareholders articulated during Barretts first year as chairman and not prevalent before includes keeping shareholders fully informed. Although the banks commitment to shareholders under Barrett seems to go beyond that under Mulholland, the shareholder group, unlike the customer group in 1990, does not emerge as the principal stakeholder group. In 1991, there is a single mention of shareholders, who along with customers, are given credit for the success of the bank. No references to shareholders are made in 1992 or 93. In 1994, Barrett reviews the banks performance for the preceding five years corresponding to his tenure as chairman and re-affirms the banks commitment to its four stakeholders. We see that the bank has been reporting record earnings since Barrett took over as chairman. This is an indication that the bank has been fulfilling the commitment to shareholders it pledged in 1990 when it pointed out that it would be providing them with an attractive, consistent and steadily increasing return. The shareholders entitlement to a competitive rate of return and the prudent management of their investment is again reiterated in 1994, echoing statements made during Mulhollands times (1986) as well as Barretts (1990). It is noteworthy that 1994 marks the year the banks stock became listed on the NYSE. It also marks the year that references to different measures of the banks profitability start appearing in the MTS.

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In 1995 the banks fulfillment of its commitment to shareholders is explicitly addressed: For me, however, the real meaning of our 1995 results is that we are fulfilling our commitment to give our shareholders a solid and, above all, a consistent return on their investment. We made that commitment when we adopted our Corporate Strategic Plan in 1990 This commitment was fulfilled despite adverse circumstances in the external environment and will remain a central issue, fundamental to our whole business strategy. The banks continued commitment to shareholders along with the other three stakeholder groups is re-affirmed. The last quotation for 1995 indicates that the values of two stakeholder groups, depositors and shareholders, are also the core of the banks values. Here we see that these two stakeholder groups take more prominence than the others. The predominance of the shareholder group becomes very clear in 1996 whereby this group is singled out from the other stakeholder groups in two quotations: - you will see how banking without boundaries means a brighter future for all our stakeholders and especially, our shareholders, who stand to benefit the most as we welcome the challenge of expanding horizons and - we are first and foremost a commercial enterprise, with an overriding responsibility to create wealth for our shareholders. We have a stakeholder strategy, because we believe it is the most effective shareholder strategy. Not only is the shareholder group singled out from the other groups as being catered to most by the bank, the shareholders are also told that the banks shares constitute an investment to buy and to keep and that the banks shareholders can not only profit from their company, but be proud to own a part of it. The last two sentences appear to induce shareholder identification with the bank: they stand above other stakeholder groups and their owning BMO shares is both an investment to keep for the long-term, and a source of pride. This identification-inducement continues in 1997 as the following statements (and several others) indicate:

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-Your Bank is the only major bank in Canada and the United States to have produced ROE exceeding 14% for the last eight years. -During the severe recession of the early 1990s, your Bank achieved record earnings, while some of our competitors stumbled Several experts in these fields have recently judged your bank to be on the leading edge of contemporary risk management capabilities. In these statements the bank addresses shareholders directly as is evident in the expression your Bank which appears at least seven times in the 1997 MTS. Most of these statements talk about measures the bank has taken or is taking to succeed. Furthermore, it is noteworthy that several references to your Bank are accompanied by some mark of distinctiveness of the bank, giving the readers (shareholders) additional reasons to identify with the bank. These include the fact that BMO is the only major bank in Canada and the U.S. to achieve ROE exceeding 14% for eight years while competitors stumbled and that the bank was judged by experts to be on the leading edge of risk management. There is an overriding tendency throughout the whole MTS to speak directly to shareholders about matters that are of concern to them. This emphasis on the shareholder shows continuity with 1996 when the shareholder group was singled out as the most significant among the stakeholder groups. Furthermore, references to the banks high profitability and extensive disclosure indicate, as in the past (1990, 94 and 95) that the bank is fulfilling the commitment it proclaimed in 1990. In brief, we see that with Mulholland, the banks commitment to shareholders is articulated in terms of providing an optimal return and prudent management of their investment. This emphasis on return and prudent management is re-affirmed by Barrett at the beginning of his chairmanhip. Barrett, however, made additional issues part of the banks commitment to shareholders, notably the banks responsibility to keep them informed and the commitment to provide them with returns that are not only attractive, but also consistent. Between 1991 and 1993 only one reference is made to shareholders in the MTS. In 1994, the banks commitment to shareholders is re-affirmed and emphasis

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is again placed on the banks responsibility to provide competitive returns and prudent management. In 1995, references to the banks profitability and the banks fulfillment of its commitment to provide attractive and consistent returns to shareholders is emphasized. In 1996, identification-inducement strategies appear in the MTS and the shareholders are placed above the other stakeholders on the banks priority list. This continues in 1997, where the MTS seems to be addressing primarily the shareholder concerns and talking explicitly to them by referring to BMO as your Bank, specially while addressing some distinctive achievements by the bank. The banks extensive disclosure, consistent and high returns, and prudent management practices are again reiterated in 1997. The banks commitment to shareholders offers an interesting contrast to its commitment to customers who, in 1990, were placed above other stakeholder groups. The strategic importance of the customers continues until 1997, but not the banks predominant commitment to them. In 1996, it is clearly the shareholder who takes center stage in the banks discourse and retains it in 1997.

Commitment to employees Table 14. Commitment to Employees -From A Commitment to People: We are committed to our employees: They are special. Their loyalty is prized as are their skills and experience. We are dedicated to their personal and professional development and well-being. We support equal opportunity and advancement in accordance with ability for all staff. -Those engaged in takeovers and acquisitions argue, sometimes correctly, that they serve a legitimate economic and social purpose. They identify areas of opportunity and by their actions force a more efficient use of capital. Even when true, this is a tough argument to sell. But, try selling it to the employees of a business that is dismembered or a plant that is shut down to help finance the acquisitor's purchase or to turn a quick profit. Multiply this many times over and it is not difficult to see how easy it is to risk destruction of the very basis of the political consensus on which a market economy ultimately rests. -It will continue to be necessary to enhance the professional skills of our management and staff -From Vision - Our Philosophy: We will offer employees the opportunity for a

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full and rewarding career, and will nurture a culture based on mutual loyalty, teamwork, respect and a strong work ethic. -From Values: Employee satisfaction leads to customer satisfaction. The Bank is committed to attracting, developing and retaining the best people. Employees can expect us to demonstrate respect for the individual, to be a fair and equitable employer, and to provide the opportunity for a full and challenging career. We will offer competitive compensation and benefits, and will recognize and reward personal achievement as well as teamwork. And we will provide opportunities for continuing professional development through training and mobility within the Bank... The Bank in turn seeks from every employee: commitment to the Banks principles and goals, a strong customer orientation, a sensitivity to public concerns and actions which are at all times socially responsible. -Todays Bank of Montrealers draw upon a prized tradition, place it at the service of our stakeholders, and hold it in trust for the future. -Finally, we can count on the great and growing excellence of our people. We are absolutely determined to have the best people in the financial services industry, anywhere in North America. We have already made notable progress along that road, and when the Institute for Learning, our state-of-the-art education and training centre, opens early in 1994 it will give us an advantage the competition will find hard to match. -And to our employees we offer equitable conditions of work, with excellent opportunities for personal and professional growth. -In five years, we have established a reputation as a bank that is sensitive to the evolving needs of our customers and employees. (Examples are then given relating to sensitivity to customer needs. Nothing else is mentioned regarding sensitivity to employee needs.) -But despite its scope, the IFL is only the latest stage of the commitment we made five years ago to give our employees the finest opportunities for learning in the financial services industry. They have rewarded us with five years of growth, leadership, innovation and record financial results. Nothing would have been possible without them, and this message is above all one of thanks to them for everything they have achieved. Their results today are our opportunities for tomorrow. -we are committing more and more electronic and human resources to building relationships tailored to our individual customers - relationships whose core is first-class professional financial advice. -Change is all-pervasive, but it is perhaps in the workplace that its effects are first brought home for most people. Rising customer expectations, together with sweeping technological, demographic and attitudinal changes, have made the

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ability to manage value-adding relationships the essential qualification for more and more employees. -The consequences for the traditional banking model of security and hierarchy are profound. Many employees in financial services are learning for the first time that their jobs will not be there. The steady decline in full-time transactionprocessing positions will continue, even as the demand for new skills increases in occupations, such as the portfolio managers of mbanx, which did not exist a few years ago. Over time, only those who consistently contribute to the wellbeing of our customers and, as a result, the profitability of the enterprise will prosper in the new century. They will have understood what is happening, and responded by preparing themselves for a new kind of banking. -Our response as a bank is to prepare a new contract with our employees, one that defines us as a learning organization. The paternalism of the past is being replaced by a professional relationship between the Bank and employees who are essentially independent entrepreneurs, with their skills as their capital. For those who welcome continuously expanding career horizons, and are prepared to take responsibility for their futures by investing in themselves, we are providing unprecedented opportunities for learning in every line of business. Over time, our reward will be to have the highest quality of human capital, which today is the only lasting competitive advantage in banking. -To work in (such a bank) is always challenging, but also rewarding and enjoyable. Description and analysis In 1986, A Commitment to People spells out how the banks commitment is exercised towards employees. This commitment has some paternalistic overtones as is evidenced by the emphasis on employees being special, on the prize the bank places on employees loyalty as well as the banks dedication to their well-being. The importance of caring for employees is again evident in the second 1986 quotation where Mulholland indicates that the more efficient use of capital is a tough argument to sell to employees of a business that has been dismembered or a plant that has been shut down in order to turn a quick profit. In this quotation, Mulholland is speaking about general business practices and exposes the fragility of the consensus on which a market economy rests. Implicit in Mulhollands statements is the indication that businesses have a social responsibility, part of which applies to how they treat employees. In 1989, Mulholland

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spells out some of the steps the bank should take in the future and they include enhancing the professional skills of employees. With Barrett (1990), the employees do not appear as special, rather we are told that employee satisfaction leads to customer satisfaction. This seems to place employees in an instrumental position to achieve customer satisfaction. However, like 1986s A Commitment to People, the 1990 statement of vision includes nurturing a culture of mutual loyalty, thus some continuity is maintained with 1986 statements. Unlike the 1986 statements, however, the 1990 vision and values statements include offering employees the opportunity for a full and rewarding career and for a full and challenging career. This emphasis on rewarding careers will be taken up in later years, but the emphasis on loyalty will be dropped. In the closing paragraph of the MTS, Bank of Montrealers are said to draw upon a prized tradition and to place it at the service of the banks stakeholders. Note the identification-inducement overtones in the expression Bank of Montrealers as well as in placing the latter in a position of responsibility to draw on a prized tradition and to hold it in trust for the future. Bank of Montrealers are thus the perpetuators of the Banks prized tradition which they place at the service of stakeholders. In 1993, references to employees are accompanied by references to the Institute for Learning (IFL), a state-of-the-art education and training center slated to open in a short while. This quotation, in addition to boasting about the IFL, also indicates that the bank is counting on employees great and growing excellence. In fact, thanking employees for all they have achieved appears in 1994 when we are told that nothing would have been possible without them. 1994 is also the year the IFL started operations and this is said to be the latest stage of the commitment made to employees in 1990 when Barrett became chairman. As mentioned previously, the 1994 MTS reviews the banks achievements since Barrett took over. It places emphasis on how the bank fulfilled its commitment to the different stakeholders during the previous five years. This MTS reiterates the banks commitment to offering employees equitable conditions of work, with excellent opportunities for personal and professional growth which echoes

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statements in 1986s A Commitment to People. The bank is also said to have established a reputation as a bank that is sensitive to the evolving needs of customers and employees. To demonstrate this sensitivity, the MTS goes on to give examples of its commitment to customers, but not to employees. In 1996, electronic and human resources -which are placed at the same level are said to be committed to building relationships with customers. More importantly, however, is the fact that of the different years studied, 1996 shows the most discontinuity with the past in its address of the bank-employee relationship as the expression change is all-pervasive indicates. Changes in customer expectations as well as sweeping technological and attitudinal changes have dictated the need for new employee qualifications, the most essential of which is managing value-adding relationships. It is important to note that employees are again - as in 1990 - subordinated to customers in this statement: only those (employees) who consistently contribute to the well-being of our customers will prosper in the new century. Thus the consequences are said to be profound for the traditional model of banking where security and hierarchy prevailed. Full-time transaction processing jobs will continue declining while demand for new skills which did not exist before will continue to increase. The onus is on the employees to understand what is happening and to prepare themselves for a new kind of banking. This kind of banking involves a new contract with the employees and replaces the paternalism of the past. No quotation speaks about radical change as forcefully as do the ones appearing in 1996. The contrasts between the past on one hand, and the present and the future on the other, are remarkable. The bank is further said to be providing employees who have an entrepreneurial spirit unprecedented opportunities to invest in themselves. The banks reward is to have, over time, human capital of the highest quality. Working in such a bank is said to be challenging, enjoyable and rewarding. Remark that in 1990, the statement of vision and values pledges that the bank will offer employees the opportunity for a full and rewarding career. However, unlike 1990, the 1996 MTS says nothing about mutual loyalty between the bank and employees. In 1996, the banks commitment to employees

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is maintained as long as the latter are ultimately able to contribute to the banks bottom line. The banks commitment to employees does not appear as a matter of social responsibility; neither does it revert to the normative realm. Rather it is based on a calculated exchange relationship. Its commitment to employees is contingent on the employee-customer relationship. Only when the employee takes responsibility in ensuring that his/her relationship with customers consistently contributes to the profitability of the enterprise, will the bank fulfill its commitment to the employees. It must be noted that in 1996, BMO introduced mbanx which is portrayed in all BMOs publications as a totally new concept in banking and as a revolutionary step in the banks history. In brief, in 1986, the banks commitment to employees indicates that the latter are special, that the bank prizes their loyalty and skills and is committed to their personal and professional development and well-being. In 1990, the statement of vision and values makes no indication of the employees special status, but maintains the emphasis on mutual loyalty between the bank and employees and the banks commitment to their professional development. It further indicates that it offers employees the opportunity for a full and rewarding career. As the IFL gets completed and operational, it is presented as a step in the banks commitment to employees, which in 1994 is again reiterated in terms of providing the latter with excellent opportunities for personal and professional growth. 1996 brings some major discontinuities with the past, as well as some continuities. The banks commitment to provide employees with rewarding careers is reiterated, but that is done under the terms of a new contract between the two parties whereby the employees take responsibility for investing in their skills and for acting as entrepreneurs with their skills as their capital. Only those employees who are able to contribute to customers well-being and, therefore, the banks profitability, will find employment under this new contract. Working under such conditions is said to be rewarding which implies a fulfillment of the banks 1990 commitment to provide employees with challenging and rewarding careers. Paternalism (as the 1986 quotations implicitly declare) is considered in 1996 to be a thing of the past.

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Commitment to the community Table 15. Commitment to the community -From A Commitment to People: We are committed to the communities where we live and work: We have traditionally observed the responsibilities of corporate citizenship, supporting charities, cultural programs, civic projects, research and education. Our staff voluntarily contribute time and talent to community activities. -With added powers, greater responsibility will fall on financial institutions to impose disciplines on themselves and to demonstrate consistently that the powers granted to them are being used prudently, responsibly and in the best interests of the community. -One troubling development during the course of the last decade has been the lapse in ethical standards and behaviour experienced in the financial world. Failures of ethical conduct in the investment industry have been especially conspicuous for the magnitude of the sums involved. They were all simply breaches of basic trust - betrayals of values that have always been as essential to success in business as they are to our personal lives. These actions have been rightfully held up to public censure, and their unfortunate consequences underscore the need to earn and to preserve the trust of the community. Ultimately, all businesses operate only with the support of society, and that support should never be abused nor taken for granted. -From Vision- Our Philosophy: We will be involved in the communities we serve, and will always demonstrate high standards of social and corporate responsibility. -From Values We do business with the permission of the communities we serve: Communities expect us to consistently demonstrate social responsibility as an employer and as a corporate citizen. This we will achieve by serving the public interest, and the interests of consumers and local businesses in communities nationwide. We will encourage our employees to participate in community activities, and provide financial and other assistance to educational, cultural, health care and sports programs. -Communities look to us for quality services unique to their needs, and for a commitment to the public interest- making the community a better place to work and live. -We have decentralized so that virtually all our small business loans are approved within the communities where they operate. -We are an active and responsible member of every community where we do business.

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1996

-Let me review briefly some key achievements of this strategy in the last five years and in 1994 in particular. We have customized Personal and Commercial Financial Services to meet the unique needs of 234 communities across Canada. We did that to bring the full strength and reach of a major bank into communities where real decision-taking authority lies with people who live and work in the community they serve. Our customers have rewarded us with substantial growth in market share. -Sensitivity to our customers' needs is paralleled by our response to the rising standards that communities are setting for corporations everywhere. We acknowledge and welcome the responsibilities that come with a franchise to do business. The first and most fundamental of them is simply to run a profitable enterprise. By providing high-quality, cost-efficient financial services for our clients we help them to prosper in their endeavors, while earning a steady competitive return for our shareholders, creating a major market for our suppliers and investing in the skills and experience of our employees. We also pay taxes and levies to all levels of government which in 1996 once again exceeded the total earnings available to our shareholders. And by doing all these things we add significantly to the wealth, productive capacity and policy options of society as a whole. -We also fulfill our responsibilities by contributing time, money and ideas to the common cause. This is one of the oldest traditions of the Bank, but it has never been more relevant than today. Needs are growing steadily as governments strive to put their financial houses in order. While it is not realistic to expect that any one company - or even the whole corporate sector - can completely fill the gap, last year the Bank of Montreal Group of Companies gave nearly $17 million in donations and sponsorships, and the time and effort freely offered by our employees were at least equally significant. In the final analysis, we believe that corporate responsibility and corporate profitability are not alternatives, but interdependent and mutually reinforcing factors in business success. Each is ultimately made possible by the other. -Such a bank is an immensely valuable partner for the communities in which it does business.

Description and Analysis In A Commitment to People, BMOs commitment to the communities where we live and work is expanded upon. It involves a traditional adherence to corporate citizenship and the support of a variety of charities and social programs. The bank contributes in two ways: as an institution, and as staff vouluntarily participate in

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community activities. This is one of the few references made during Mulhollands time to BMOs role in particular towards the community. In addition, this quotation shows a narrower view of the community (the communities where we live and work) than some of the other quotations that refer to the community in a broader sense. In fact, in the MTSs, Mulhollands discourse places more emphasis on the social responsibility that financial institutions and businesses in general have towards the community. The second quotation in 1986 and the one in 1989 attest to this fact. Not only businesses ought to behave in socially responsible ways, they can only operate with the support and trust granted to them by the community. Community, here, refers to society in general or possibly to the public. With Barrett, the emphasis shifts to BMO in particular. No mention is made of the responsibilities of business firms in general towards the community. In 1990, we can see that continuity is maintained with 1986 in the emphasis on the communities we serve and on the banks pledge of social responsibility. However, there is an additional reference with Barrett on the banks commitment to provide communities with services unique to their needs. This latter aspect of the banks commitment to the community will continue into later years with Barrett as the quotations in 1992 and 94 indicate. 1994, as mentioned before, was the year in which the banks achievements since Barrett became chairman were reviewed, and the banks commitment to its four stakeholders was re-affirmed. One of the banks achievements mentioned is the customization of services to meet the unique needs of 234 communities across Canada. In this case, communities and customers seem to be used interchangeably as the last sentence in the quotation indicates: Our customers have rewarded us with substantial growth in market share. In 1996, we see the bank as responsive to the rising standards that communities are setting for corporations everywhere, and the banks most fundamental responsibility in this regard is to run a profitable enterprise. In other words, making a profit is portrayed as meeting community-set standards of corporate behavior. This gives a normative overtone to the need to make profits. How making profits contributes to

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different segments of the community (including clients, shareholders, employees and society as a whole) is then exposed. In the second quotation, the bank is said to be fulfilling a responsibility constituting one of the oldest traditions of the Bank: contributing time, money and ideas to the common cause. As was mentioned in 1986, the bank contributes as an institution and through its employees. However, 1996 is the first time when a direct and explicit relationship is established between corporate responsibility and corporate profitability, which in the final analysis, the bank believes are not alternatives, but mutually reinforcing factors in business success. After outlining a series of bank achievements and undertakings, BMO is said to be an immensely valuable partner for the communities in which it does business. This appears as an identification-inducement tactic, but on a community scale. In brief, we see that with Mulholland, emphasis is placed on social responsibility of businesses in general towards the community at large. References to BMOs exercise of social responsibility are scarce and the quotation from A Commitment to People is one of them whereby BMOs commitment to the communities where we live and work is articulated, but then again, in terms of corporate citizenship. This emphasis on business firms general responsibility is dropped with Barrett, but we find continuity in articulating BMOs commitment to the communities where the bank does business. Furthermore, with Barrett in 1990, an additional dimension appears as part of the banks commitment to communities, namely the banks serving the unique needs of communities, an issue which appears in discourse quite often starting in 1990. By the end of the period under study, corporate responsibility and corporate profitability are said to be mutually reinforcing factors in business success. The normative and instrumental requirements become hereby confounded.

5.2.2.f The Identity Paradox Before moving to a discussion of the identity themes, I would like to present an interesting aspect of BMOs self-reference which emerged from the data and which was alluded to several times in the analysis. It relates to the banks discourse on identity in

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general, and not a particular identity theme. This is the tendency for apparently contradictory identity themes to be addressed simultaneously or sequentially in the banks discourse. Addressing a principle occasions the evoking of a divergent principle which is often made to appear as complementary and not contradictory. Remark the quotations in Table 16: Table 16. Paradoxical identity attributes -It will continue to be necessary to maintain an up-to-date technological capability, to maintain a flexible and adaptable structure, to enhance the professional skills of our management and staff, to improve productivity, and to continue to search for ways to add value to the service we provide to our customers. These are all part of the ongoing challenge of doing business. Amidst all of this change, however, there are a few fundamentals which do not change and of which we need to remind ourselves from time to time. First and foremost amongst these fundamental values is the integrity of the institution and its people. It is clearly in our interest to uphold these values, but it is also a responsibility which comes with more than 170 years of honorable service. -Although we have kept pace with the times, our values have remained constant and untarnished. -our North American strategy is both an exhilarating new departure, with immense promise for all our stakeholders, and a natural development from our proud Canadian past. It's an old tradition - and a real first. -In this flux we have two fixed points. The first is the vision and values we adopted in the Bank's 1990 Strategic Plan.The second fixed point is our determination to take nothing for granted. -Banking is an inherently conservative business. Our depositors and our shareholders rightly prize stability, and we have put it at the core of our values. But the central paradox we face is that as the twentieth century ends, stability and sustained returns can only come from an open and inquiring mind. The tension between the maintenance of order critical to the care of other people's money - and creative innovation must be skillfully managed if success is to be sustained in a financial services institution. -All these responses to change are significant in themselves. Together they equal the reinvention of the Bank, of which our new mbanx brand is the symbol. Yet as always amidst all the changes there will be a powerful element of continuity. The values of integrity, accountability and respect for human beings that permeate all our strategies will not change. -We are living in a time of great change, and success in this era requires the ability to accept and embrace change, and to seize the opportunities it creates. By identifying those opportunities and incorporating them into a prudent,

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balanced strategy, the management of your Bank believes it has set the course for the sustained building of shareholder value for many years to come. Description and Analysis The above table demonstrates how seemingly contradictory issues are addressed together. For example, in 1989, after Mulholland addresses all of this change, he affirms that there are a few fundamentals that do not change at the bank. Similar statements are made by Barrett in 1990 and 96. For example, in 1996, amidst all the changes is followed by a reference to a powerful element of continuity. Almost all references to change at the bank are accompanied by references to continuity or to prudence and stability. Although in a few of the above references, the two seemingly opposed principles (change on one hand and continuity and stability on the other) are simply juxtaposed, in most occasions, we see an attempt to reconcile the two principles. For example in 1993, the North American strategy which is said to be an exhilarating new departure is also presented as a natural development from the banks past; in other words, the departure does not constitute a break with the banks past general practices. The move to reconcile stability and continuity with change is also apparent in 1995 and 97. In 1995, Barrett addresses the tension that exists between maintenance of order and creative innovation, and declares that this tension can be skillfully managed. If we break down the argument in 1995 to its components, we see the following declarations: we need to provide stable and sustained returns come from innovation stable and sustained returns will only

creative innovation can be skillfully managed to provide such

stability. Similarly, in 1997, the argument seems to flow as follows: change creates opportunities opportunities have to be prudently incorporated in strategy this

strategy helps build sustained shareholder value. Implicit in these statements is the assertion that these seemingly divergent issues are not contradictory, but complementary. There is a move to reconcile the need to change with the need to maintain stability.

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In this section, prominent identity themes were presented and analyzed for each of the banks. The next section provides a discussion.

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6. DISCUSSION

In this section, a discussion is provided for each theme separately as each theme has some particularities which may not be relevant to other themes. A general discussion of the banks identity then follows. The discussion parts relate the findings of this study to extant literature where applicable. These steps are followed for RB in the first section, and for BMO in the second. The third section provides a general discussion of both banks whereby similarities and differences between the two banks are elaborated on, and a number of general conclusions regarding organizational identity and its evolution are presented.

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6.1 ROYAL BANK

In this section, I will discuss each of the five RB themes presented before. The evolution of the theme with time and the aspects of identity it reveals differ from theme to theme. The following discussion emphasizes the particularities of each of the five themes that have emerged from the data and relates the findings to extant literature where pertinent.

6.1.1 QUALITY SERVICE TO CUSTOMERS The fading of identity with the fading of image The study period opens with RB placing the most emphasis on its quality of service attribute, describing it as distinctive, constant, and a reason for everything else the bank does. Consumer deposits are said to come to the bank and stay with it, and profits are considered an indication that value is being provided in the eyes of the banks customers. A big part of the MTS in 1985 is devoted to the quality service theme. As RB starts to lose its supreme position among banks in terms of distinctive quality service, the latter is framed as a goal to be achieved. In other words, it moves from the realm of an actual self-defining identity attribute to a projected identity attribute to be achieved through a number of measures taken at the bank. The banks image with the public (Dutton and Dukerich, 1991) or the banks reputation (Whetten, Lewis and Mischel, 1992) act as a mirror providing the organization with a reflection that it uses to adjust the way it sees and defines itself. In other words, RB would not be able to continue defining itself as distinctive in terms of quality service and get confirmation for this definition from the different audiences to which its statements of identity are destined. Ultimately identity presentation by an organization has to be confirmed by the external world (Levitt and Nass, 1994).

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From a core identity attribute to a projected attribute to a peripheral attribute Yet, RB does not simply give up its self-definition in terms of distinctive quality service. When its distinctiveness in terms of this attribute fades, the bank devotes enormous effort to recapture its lost position as leader in quality service. A senior executive is appointed with responsibility for quality endeavors at the bank, more effort is placed into learning about customer needs and wants, the bank strives to not only meet customer expectations, but also exceed them. In fact, it is not sufficient that the bank rank highly, it desires to be the clear leader in quality service (1991). How can the banks preoccupation with quality service be explained? Quality service, it is indicated, was a constant, a tradition, and a distinctive trademark of the bank (1985 and 86). Losing a long-held supreme position over competitors is hard to accept. In addition, quality service is a core identity theme (as opposed to a peripheral one) and it is difficult for an organization to let go of its core attributes. A core theme is one that is central and is densely intertwined with other aspects of the organization (Tannenbaum and Hanna,1985). Figure 1 indicates the issues that are said to revolve around quality service in 1985 and 1986. In addition, quality service is said to be a source of competitive advantage and both, implicit and explicit causal links are made between quality service and profits at different occasions (for example in 1985, 88 and 94). It appears in the bank discourse as a sine qua non of both: its financial success and its distinctiveness. So important is this attribute that even the smallest gain in quality service ratings is celebrated (1992). However, as the banks continued efforts to gain their lost position and rank do not lead to the hoped for results, discourse about this factor wanes. Attention gradually shifts from the goal of being in a leadership position in quality service to a certain measure of customer satisfaction. The organization had set for itself an objective - a projected identity attribute - and had engaged in activities aimed at attaining the projected attribute. When its continued efforts failed, it reformulated its objective in more achievable terms - here in some quantifiable term - and dropped its emphasis on quality service being a desired identity attribute.

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From a normative theme to an instrumental theme As the bank loses its supreme ranking among other banks in terms of quality service, and continued efforts to re-establish that rank do not seem to lead to a clear

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Figure 1: Quality service as a core theme

Prudential management Fee-generating services

Staff training

Quality service to customers

Product innovation Productivity improvement

New technology

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Figure 2: Quality service developmental trajectory

Lower quality ratings in surveys

Distinctive and central attribute

Projected distinctiveness; central attribute

Peripheral attribute

Interpretation of lower ratings

Failure to achieve clear supremacy despite numerous efforts

Figure 3: Quality service: from normative and core to instrumental and peripheral theme

Instrumental Theme Periphery

Normative Theme

Core

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distinctive positioning, quality service starts to fade in the bank discourse. The loss of distinctiveness precedes the fading of the themes centrality. In the later years, when distinctiveness in customer service cannot be claimed anymore, the theme seems to be more at the periphery than at the core of the banks self-definition. Rather than being pursued for its own value, quality service becomes an intermediary goal, pursued to achieve some other purpose which has higher primacy (in this case, achieving higher revenues and income). In fact, quality service evolves from being a normative theme to being an instrumental one. At the end of the period, quality service corresponds to what Gustafson and Reger (1995) call tangible, substantive attributes. Figures 2 and 3 illustrate the evolution of the quality service theme.

6.1.2 FEE-AND-INCOME GENERATING ABILITY From a peripheral attribute to a central identity attribute The evolution of the fee-generating ability theme provides an interesting contrast to that of the quality service theme. Although fee-generating ability appears to have some significance in 1986, it is not a theme that appears frequently in the MTS, nor does it seem to be of centrality before 1994. In fact, like other spheres of activity at the bank in 1986, feegenerating services are said to play a vital role in building strong relationships with customers. As the bank moves into new areas of business such as investment management and trust company operations with its acquisitions of Dominion Securities and Royal Trust, the emphasis on fee-based businesses becomes more pronounced. Furthermore, these businesses make increasing contributions to the banks total revenues as the years go by. Meanwhile, fee-generating ability emerges as a more central theme in the sense that other procedures and undertakings start to revolve around it, such as the bank acquisitions. Towards the end of the period, fee-and-income generating ability appears as a mark of distinctiveness at the bank (1996 and 97). In other words, fee-generating ability becomes more entrenched in the banks discourse on identity. As the bank projects that fee-generating services will increase in importance in the future, makes acquisitions in businesses that are largely fee-based, generates an increasing proportion of revenues from fee-based businesses,

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and achieves an exceptionally strong position in doing so, this identity theme becomes institutionalized. Fee-and-income generating ability thus progresses from a projected

attribute, to a realized and central attribute to a distinctive attribute of the bank. Figure 4 illustrates this evolution. The process of institutionalization is an incremental one, as different undertakings and achievements bring it closer to its stated projected identity attribute, thus narrowing the gap between desired and actual identity.

A shift in the constellation Fee-and-income generating ability increases in centrality with time. Increasing centrality implies that the theme moves from the periphery to the core of identity. It also implies that the theme becomes more intertwined and interrelated with other themes articulated at the bank (Tannenbaum and Hanna, 1985). The fee-and income generating ability theme follows an opposite trajectory to that of quality service to customers. At the same time that fee-generating ability was emerging as a more central theme, quality service was losing its centrality in the banks discourse. Table 17 provides quotations indicating the points in time at which each of the two themes appeared as prominently central themes. Evidence of centrality is provided by quotations on different issues revolving around the given (central) theme.

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Figure 4: Fee and income generating ability developmental trajectory

Projected attribute

Realized and central attribute

Central and distinctive attribute

- Mergers and acquisitions - Higher proportion of revenues generated from fee services

-Exceptional strength achieved

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Table 17. Central themes and their constellations Central theme Issues revolving around the theme Quality service fee generating ability relationship Quality service Fee-and-income generating ability

Prudential management

1986 - As well, fee-generating services will increasingly play a vital role in helping to build strong, lasting and profitable relationships with customers. 1985 - Confidence, in the end, cannot be assumed, or manufactured. It must be earned by a track record of prudential management - the most basic element of customer service for a financial intermediary.

1985 - Serving customers well remains at the heart of RBs Bank procedures and mission. It is the basic reason for everything else we do. undertakings 1986 - Expanding into ...new service areas is vital to one of our central corporate goals: to be recognized by our customers as a Expansion consistent leader in the value of efforts our products and customer service. Commitment to quality service is a distinctive RB trademark, and to build on that strength we must continue to expand our range of services to meet growing customer needs. Banks stated 1990 - For RB an absolutely top priority continues to be priorities improvement in the quality of our service.

1994 - Increased revenue generation from traditional and emerging businesses is our top priority. We will achieve this by continuing to improve service quality 1992 - If there is one lesson we will take away from this recession, it is the inescapable relationship between sustainable earnings and credit risk. 1993 - Sound credit risk and loan portfolio management are fundamental to the profitability of the bank. 1995 - Our focus is on securing consistent superior returns for our shareholders and all our initiatives are undertaken with that goal in mind. 1996 - Our three main acquisitions this year all fall in this high potential segment (of high ROE, fee-based businesses).

1994 - Increased revenue generation from traditional and emerging businesses is our top priority.

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In 1986, fee generating services were presented as one of the elements leading to building strong relationships with customers. Like other aspects of the banks activities at the time, fee-generation revolved around the customer service theme. In contrast, in 1994, increased revenue generation is said to be achieved by continuing to improve service quality. In other words, quality service is now portrayed as revolving around the central theme of revenue and fee-generation. Similarly, other issues such as prudential or risk management, bank procedures and undertakings, expansion efforts, as well as the banks stated priorities, which initially revolved around quality service to customer, are decoupled from this theme in later years and associated with the fee-and-income generating ability. We can tell that a theme increases in centrality as different spheres of activity revolve around the theme in question. It is also interesting to note that with a shift in centrality from quality service to feeand-income generation, there is a shift in stakeholder focus from the customer to the shareholder. Remark the frequency with which these two stakeholders are mentioned in the first and last two years of the study in the message to shareholders: Word frequency count Client(s)+ Customer(s) Shareholder(s) 16 2 14 3 2 8 8 9

Year 1985 1986 1996 1997

In fact, the customer is a theme that is more coherent with quality service, as the shareholder is more coherent with income generating ability. Coherence thus can be found among a given core identity attribute, the stakeholders who have the most interest in the particular identity attribute, and the peripheral activities undertaken to reinforce the actual and/or desired core identity attribute. A central theme draws other themes to it that revolve around it and which are coherent with it. Let us refer to an identity attribute along with the different spheres of activities that revolve around it and are coherent with it as a constellation. As an identity attribute changes in centrality, we see a shift in the different constellations.

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To a certain degree, quality service and fee-and-income generating ability follow opposite trajectories, with quality service moving from the center to the periphery and fee generating ability moving from the periphery towards the center of identity. While the first theme fades, the second gets institutionalized with time and appears more frequently in discourse. However, fee-and-income generating ability does not seem to attain the normative status that was once an aspect of the quality service theme. It is not portrayed as a tradition or as a value. Only time can tell whether it will be expressed as a normative theme in the future.

6.1.3 BANK-FI The institutionalization of the FI attribute When the study period opens, we witness RB defining itself as Canadas largest bank. In 1986, it indicates that it would like to become this countrys leading provider of financial services and later that a fundamental goal is achieving excellence in a full range of financial services (1988). What was a projected identity attribute (ability to provide a full range of financial services) eventually becomes an institutionalized identity attribute as the bank makes a number of acquisitions in different areas of the financial services sector (following government deregulation), states its objectives as including increasing revenues from emerging business, and derives a bigger proportion of its revenues from such businesses. With time, the self reference as a financial institution - as opposed to a bank - becomes institutionalized; it appears frequently in the banks discourse. Institutionalization, as Selznick (1957) indicates, is a process that occurs with time, reflecting the organizations undertakings and the way it has adapted to its environment. There is a self-definitional change from a bank (1985) to a more broadly based financial services enterprise(1988) to being one of the largest providers of integrated financial services(1993) and to having a leading position in most financial services markets (1996). Furthermore, this change is accompanied by another shift: that in the reference made to the services the bank provides. As mentioned previously, core businesses are later referred to as traditional and the emerging label which

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Figure 5: FI theme developmental trajectory

- Deregulation allowing banks to expand range of services

Bank

Financial institution

Acquisition of DS Acquisition of RT Increasing revenues from emerging business

Core businesses

Traditional and emerging businesses

Traditional and (regular) businesses

Royal Bank

Royal Bank Financial Group

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Figure 6. Increasing complexity in identity

FI

Bank

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accompanied new businesses in 1994 is dropped in later years likely indicating that these businesses were considered to be regular at the bank by then. The Royal Bank name also gets changed to Royal Bank Financial Group. Here again, a shift in an identity attribute is accompanied by a shift in the constellation of which it is a part. This is illustrated in Figure 5. Furthermore, the process of institutionalization of the FI attribute is incremental. As mentioned before, RB moves from considering itself as a bank (1985) to a broadlybased financial services enterprise (1988) to a provider of integrated financial services (1993). As the transition occurs, RB does not cease to be a bank in order to become something different. Rather, as a financial institution, RB still includes banking operations. There is an increase in identity complexity, rather than a configurational shift in identity. Figure 6 shows the bank identity as subset of the FI identity.

6.1.4 LARGE A shift in the attribute and the membership group and a continuity in distinctiveness Evoking its distinctive size is a constant in RBs discourse over the years. The bank consistently evokes some measure of size along which it can claim a distinctive rank within a certain group. However, some change can be noticed over time with respect to two aspects of the banks rank in terms of size: a) the particular measure of size the bank evokes and b) the particular membership group which is used as a reference for the comparison. With respect to the measure of size, it can be noticed that RB addresses those measures that allow it to claim distinctiveness within the membership group. So for example, while in 1991 and 94, RB addresses the criterion of total assets, this criterion is dropped in 1997 when it was in a tie with CIBC for first rank in terms of asset size. Instead, other measures of size, not evoked during the earlier years such as revenues and net income, are addressed in 1997. With respect to the membership group evoked, we notice a shift with time as well. In the earlier years of the study period, RB extols its rank on a North American scale:

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fifth largest bank overall in North America in 1985, and third largest bank in North America in 1990. However, references to its rank on a North American scale are dropped in later years. In fact, the last few years have seen a wave of consolidation in the North American financial industry and have been marked by huge mergers and acquisitions. When measured by assets, the Canadian banks have been on a downfall (Financial Post, July 29, 1995). In the final years of the study period, only membership in the Canadian financial institution group is evoked. Within this group, RB can still claim its distinctiveness in terms of size. This is consistent with Elsbach and Kramers (1996) findings which indicate that organizations resort to selective categorizations highlighting alternate identity attributes or alternate comparison groups that allow them to portray themselves in the most favorable light.

6.1.5 LEADER Change and continuity in leadership: Leadership as an umbrella theme That leadership is a central theme in the RBs self-presentation is indicated by the fact that this theme appears constantly in the banks discourse, is associated with other areas of centrality at the bank (such as quality service in 1986, and ability to generate high earnings in 1997), and is attributed to the banks partners and employees. It appears essential for the bank to cast itself, its member companies, and employees in terms of leadership in some aspect. Leadership is not only central, but also a distinctive attribute. A leader stands out from the other members of a group. In fact, the leadership theme, as was indicated previously, is intertwined with a number of symbols and emblems at the bank. The name Royal Bank has connotations of leadership; royalty is normally charged with leadership functions. The banks symbol - and what Interest magazine calls their public identity - includes a lion and a crown, both symbols associated with leadership. The corporate pin, worn by many RB employees also consists of the Leo. Leader and its visual counterparts are floating symbols that get attached to a variety of aspects of the organization.

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Nevertheless, we might question what being a leader means. For example, in 1986, 89, 90 and 92, its vision and objectives of being a leading Canadian financial institution at home and abroad are expressed. A leading institution remains a vague term since it does not apply to a particular aspect of the bank in which leadership should be achieved. When the bank is more specific with respect to the areas in which leadership as an objective is desired, different aspects emerge. They include: size, scope and profitability (1988), broad range of bank-based services (1989), investment management (1990), service quality (1991), service quality, customer satisfaction and profitability (1992), and the consumer business (1996). A similar argument applies to areas where leadership is said to have been already achieved at the bank. References to specific areas of achieved leadership include: system and technology (1985, 89 and 90), U.S. foreign exchange market (1989), market share position (1992, 95 and 96), and ROE and HR practices (1997). In other words, leadership functions as an umbrella theme (Figure 7) which can group a variety of aspects of the bank because it is ambiguous. By talking about itself as a leader, the bank can always appear as distinctive, although the aspects that confer distinctiveness on it may change with time depending on the context. Initially leadership in quality service is said to be achieved (1986) and later it is said to be desired. In contrast, leadership in profitability is said to be desired initially (1988) and to be achieved in later years (1997). Leadership in quality service is generally absent in later years. As mentioned above, the leadership label is a general one which the bank applies to different central themes. While the aspect of the bank to which the leadership label is applied changes with time, the label itself remains constant providing some continuity in the organizations selfreferential discourse (Gioia et al, 2000).

-xx-

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Figure 7. Leadership as an umbrella theme

Leader
Fee and income generating ability Quality service New technology HR practices

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What general inferences might we draw about RBs identity themes from the previous discussion? The discussion indicates that both continuity and change in identity themes occur. The change or persistence in identity themes takes place at different levels. The first is the degree of distinctiveness and centrality of the theme. Thus, quality service to customers loses its distinctiveness as the banks image with the public declines relative to its past image and relative to other institutions image. With the decline in its distinctiveness, this theme appears less as a normative and core theme, and more as an instrumental and peripheral one. Conversely, the fee-and income generating ability theme increases in centrality and distinctiveness as the bank projects this ability to play a more important role in the banks operations and as the internal and external environments allow the bank to narrow the gap between the projected and the attained attribute. There is, however, a persistence in the banks claimed distinctiveness in terms of its size. The distinctive size attribute endures since the bank resorts to selective categorizations allowing it to claim a superior rank with respect to measures of size and comparison groups that shift with time. Continuity and change can also occur at the level of the meanings that are attached to the labels by which the bank defines itself. We see that by relying on the ambiguity of symbolic resources such as the leader label, RB is able to portray its present and projected identity as consistent with past attributes. While the label itself provides continuity, the aspects in which the bank is a leader change with time. The banks leadership position is maintained, but this position differs in meaning in 1997 from that in 1986. In addition, the labels themselves can shift with time. Thus we see a transition in the self-definition from a bank to a financial institution. This change in the label is also accompanied by a change in the meaning attached to it: in this case, not a radically different meaning, but one implying increased complexity. In summary, the change in the themes is often evolutionary as opposed to revolutionary (Tushman and Romanelli, 1985). It is minor and incremental when measured from year to year. Nowhere in the case do we see a major break in a theme

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from one year to the other. None of RBs identity articulations show an abrupt severance with the past. Some themes (like distinctive quality service) are left to fade as management addresses them less often or less forcefully in discourse. Other themes (such as fee-and-income generating ability and FI) build slowly into a central position. Yet, although the changes follow an evolutionary pattern whereby minor changes can be observed from year to year, the magnitude of the change for these three themes is quite large when the difference between the theme at the end of the study period (1997) and the same theme at the beginning of the period (1985) is measured. The pace of change is slow, but over the years, the aggregate magnitude of the shifts is significant.

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6.2 BANK OF MONTREAL

In this section, I provide a discussion of each of the BMOs identity themes analyzed in the previous chapter and I conclude with a general discussion of BMO.

6.2.1 FIRST Continuity and change in the first theme: First as an umbrella theme As was shown in the previous section, the first theme is one that is used to refer to two aspects of the banks identity (Figure 8), its being the oldest bank in Canada and its being an innovative bank, one that undertakes important moves ahead of its competitors.

Figure 8. The two meanings of the first theme First

Oldest

Innovative

While the banks age and history receive mention in 1991 and 1993, such references are basically absent from the MTSs thereafter. Starting in 1993, first is used mainly to denote bank innovation, even some of its oldest ones. In later years, all references to first are used to portray one innovation or another at the bank such as making tools of financial planning available to Canadians for the first time (1994), IFL as a first facility of its kind in Canada (1994), first NAFTA bank (1996). References to first as oldest get aborted while references to first as innovative increase in frequency. This is not surprising given Barretts views of the past traditions, traditions that seemed to be entrenched at the bank. At different occasions, in addressing employees through articles in the FirstBank News, Barrett derides a number of the banks past attributes and practices. For example, in an article entitled Moving into the lead, he declares the bank to

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be adopting a new system where leaders inspire people as opposed to the banks past system where bosses gave orders and workers carried them out (FirstBank News, July/August 1992). At several occasions, he talks about the need for the people at the bank to contribute to the transformation of BMO into a creative and learning organization (FirstBank News, 1995-96). However, regardless of the meaning that first subsumes in the MTSs, it is extensively used in association with different aspects of the bank. First is a floating theme which gets associated with bank publications, products and services as well as with other self-defining themes. For example the employee house organ is called FirstBank News and a number of the banks mutual funds have apellations including the first label. This label is also associated with other attributes which are themselves self-defining for the bank. In 1993, the banks newest first (North American scope) is announced. In 1994, making tools of financial planning available to Canadians for the first time is extolled (which is an indication of BMOs reputation as a bank that is sensitive to the evolving needs of customers i.e. commitment to customers). In the same year, the launch of the IFL, the first corporate built facility of its kind, is announced (which is an instance of the banks fulfillment of its commitment to employees). In 1996, BMO is said to be the first NAFTA bank. These aspects described as first or innovative are self-defining attributes. First is intertwined with a persona for the bank. It is also an umbrella theme that can group a number of other attributes of the bank (Figure 9). By using this label the bank maintains a sense of continuity over time. The label persists although the meanings attributed to it (Gioia et al, 2000) and the aspects of the bank with which it is associated change with time. By relying on the ambiguity provided by symbolic resources (Christensen and Cheney, 1994), a sense of continuity, despite change, can be maintained. Remark that regardless of the meaning which is attributed to first, it remains a sign of distinctiveness. As the oldest bank in Canada, BMO cannot be surpassed by any

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other bank. As an innovative institution, BMO introduces new products, services and practices ahead of competitors.

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Figure 9: First as an umbrella theme

First
Introduction of products and services (Commitment to customers) North American (and NAFTA) IFL (Commitment to employees)

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Innovation as a fixed and persistent theme that facilitates change The banks innovative side is referred to with several terms in addition to first. The latters synonyms of innovative, creative, bank that leads change appear quite frequently in the MTS starting in 1992. In 1992, the bank extols a number of innovations it had undertaken with respect to its dealings with small business customers. In 1995, it is indicated that fresh ways to practice the banks values towards its stakeholders are continually searched for, and in 1996, the bank is said to be preparing a new contract with employees, one that defines the bank as a learning organization. Of the different characteristics that an institution can attribute to itself, none provides the possibility of as much continuity and as much change simultaneously as the characteristic of innovation. By defining itself as an innovative, creative and learning organization, BMO undertakes changes in different areas and of different magnitudes without there being a change in its self-definition. Being innovative, creative and a learning organization establishes the ability-to-change as a constant self-defining attribute. Continuity can thus be maintained in the self-definition while the organization pursues a multitude of changes in different aspects of the bank. The best example of this is provided in 1995 when Barrett declares: The second fixed point (in the flux) is our determination to take nothing for granted We seek continually to redefine our business systems and our workplaces. While the determination to take nothing for granted is a fixed and persistent attribute, it allows the organization to continually redefine its systems and workplace. By defining itself as innovative, BMO assumes an expansive identity (FoxWofgram et al, 1998), one which allows it to undertake several changes without breaking. Gustafson and Reger (1995) posit that an organization operating in a highly changing environment needs an enduring and intangible attribute that allows it to achieve distinctive advantages through a variety of activities rather than through a single one. Based on the evidence from BMO, I propose that such an enduring attribute is the ability to innovate.

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Personal impact on organizational identity In some occasions when major successful changes and innovations undertaken at the bank are mentioned, the chairmen make implicit references to these successes having been achieved during their mandate - an indirect reference to the impact they have had on the banks identity. For example, Mulholland praises the ability to lend substance to the recognition that the U.S. market would play an increasingly important role for Canadian firms. (In 1988, he declares the following in the MTS: While it required no special predictive powers to appreciate the current importance and future potential of the United States market, both to Canada and to the Bank, it is another matter to lend substance to such strategic views. We were fortunate, in the acquisition in 1984 of Harris Bankcorp of Chicago, to be able to give substantive expression to what we saw as the future direction for our two countries, working and trading together. Along with other complementary moves, it has positioned us well to benefit from an active and growing economic relationship with the United States.) We know that he lent substance to such recognition in 1984 by spearheading the acquisition of Harris Bank in the U.S. In the 1989 annual report there is a page entitled W.D. Mulholland Retires (p. 31), which tells us that Mulhollands boldest strategic initiative was the 1984 purchase of Harris Bancorp, Inc. of Chicago. The move, anticipating the Canada-U.S. Free Trade Agreement four years later, gave BMO the strongest foothold of any Canadian bank in the U.S. market, underscoring Mr. Mulhollands belief that our future prosperity would depend upon a strong presence throughout North America. We also know that other Canadian banks could not boast of owning retail operations in the U.S. as BMO was able to. An article in the Financial Post (July 29, 1995, Big Six face onslaught by U.S. banks) quotes an analyst with Nesbitt Burns as saying that (The Canadian banks) could have marched into the U.S. seven or eight years ago when share prices were down and bought up U.S. banks - and they should have The Bank of Montreal has been the only Canadian bank to acquire a U.S. retail bank.

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Similarly, Barrett indicates that the measures taken at the bank to serve small business customers are together equal to the re-invention of the bank in 1992. This customer segment became a major target of the bank when the bank announced its strategic plan in 1990, the year Barrett took over as chairman. In 1994, Barrett indicates that in five years, BMO established a reputation as a bank that leads change. These five years correspond to his mandate as chairman. An article entitled B of Ms Matthew Barrett: A charismatic decision maker who loves to win (FP, July 1, 1995), indicates that Barretts willingness to lead the pack became apparent in 1991 and 1992 when B of M regularly lowered interest rates week after week in advance of competitors. This simple strategy boosted the banks image as the consumers friend, and reinforced the view of Barrett as groundbreaker. The article goes on to say that (Barrett) says that when the bank looks at executive prospects it focuses less on simple job performance than in the past, and now considers other soft attributes such as curiosity, lateral thinking, and passion for learning makeup. These claims made by Mulholland and Barrett, as well as by the business press, point out to the role that the two chairmen had personally played in shaping some major innovative aspect of the bank - an aspect which became self-defining. -traits which, not coincidentally, are parts of Barretts own

6.2.2 NORTH AMERICAN Institutionalization of the North American theme Although BMO had retail branch operations in the U.S. as of 1984, references to its being a North American bank do not become pronounced before 1993 when Vision 2002 is articulated. The vision itself is said to make the bank the first full-service financial institution to span North America. This vision acts as a projected identity for the bank and is attributed the force to make BMO a North American institution. References that appear thereafter to the banks geographic posture revolve around North America or both, Canada and the U.S. In 1994, the acquisition of Suburban Bancorp of

Chicago, narrows further the gap between actual and projected identity. Other bank

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undertakings, such as the acquisition of Nesbitt Thomson, a Canadian firm, in 1994 and the launch of mbanx in 1996, are also portrayed as part of the achievement of the North American scope. They help strengthen the banks self-reference as a North American bank. The equity stake taken in Mexicos Bancomer in 1996 further extends the banks geographic scope allowing BMO to call itself a NAFTA bank. As these strategic moves are engaged in and as the bank generates more of its revenues from the U.S. and Mexico, we see that the North American (or NAFTA) self-reference becomes more prominent in the banks discourse. As the years pass, more reference is made to the banks North American base as opposed to its Canadian one. The vision, the acquisition in the U.S., the equity stake in Mexico, the launch of mbanx on a continental scope and the generation of higher revenues from North American operations are associated with the gradual institutionalization of the North American theme. progression in the banks reference to its geographic scope. The progression (Canadian North American NAFTA) is an incremental one Figure 10 shows the

with each level including, but going beyond, the previous one. In fact, in its discourse, BMO portrays each level as a step further which builds on and prolongs the strengths of the past. With time, the banks geographic scope increases in complexity, but the end product encompasses the beginning one (Figure 11).

Distinctiveness only if two attributes are joined BMO defines itself as a unique North American bank. The uniqueness of its fullservice capabilities in North America are extolled by both Mulholland and Barrett. In fact, BMO is not the only bank to have full-service capabilities, neither is it the only bank to have operations in the U.S. It is however, the only bank to own a retail branch operation in the U.S which allows it to offer full services to customers. While other banks have full service capabilities, these do not apply to the U.S., and while they operate in the U.S., they do not do so with the capacity of retail bank operations. The uniqueness or distinctiveness lies in the combination of two attributes: North American geographic scope + the full service capability. BMO resorts to selectively addressing those identity

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attributes that allow it to claim distinctiveness within a comparison group (Elsbach and Kramer, 1996.) In fact, all Canadian banks have expanded different operations into the U.S. market for it is seen as a market with high potential for growth. An article in the Financial Post (July 29,1995) indicates that Observers believe that Royal has been looking to

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Figure 10: North American theme developmental trajectory

Canadian Bank

North American Bank

NAFTA Bank

Vision 2002 Acquisition of Suburban Listing on NYSE

Investment in Bancomer Increased revenues from nonCanadian operations

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Figure 11: Increasing complexity of geographic scope

NAFTA bank

North American bank

Canadian bank

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acquire a U.S. retail bank but has been unable to identify a suitable candidate. One of the stumbling blocks for any Canadian bank is the fact that U.S. banks are very expensiveBank of Montreal has been the only Canadian Bank to acquire a U.S. retail bank. It is not surprising therefore, that BMOs U.S. retail branch operation is seen as a self-defining element: it is a sign of the banks success as well as a sign of distinctiveness. It is thus not surprising that references to the banks uniqueness with respect to its U.S. operations are almost always accompanied by reference to the fullservice capability.

6.2.3 COMMITMENT TO STAKEHOLDERS (COLLECTIVELY AND INDIVIDUAL GROUPS) Centrality and distinctiveness Could we say that BMO has a distinctive commitment to its four stakeholders which sets it apart from other financial institutions? This would be a hard question to answer with any degree of precision. What we know is that the banks commitment to its four stakeholder groups receives center stage in its discourse in 1986, 90, 94 and 95 and that partial aspects of its commitment to specific stakeholder groups are emphatically presented as distinctive throughout the years. In fact, the needs of the four stakeholder groups would have to be heeded by all Canadian banks, rather by all business firms that would like to succeed. However, what is specific about BMO is that it makes the commitment to people or stakeholders a self-defining theme. In 1986, this commitment is said to be a Bank of Montreal tradition, a cornerstone of our reputation since Bank of Montreal first opened its doors in 1817, a constant despite the many changes in the bank, principles (that) have guided (the bank) through more than a century-and-a-half of growth and expansion In 1990, the year the banks strategic plan was revealed, we are told that the needs and expectations of the four stakeholders are placed at the center of the plan. During that same year, the banks vision and values are articulated in terms of its commitment to its four stakeholder groups. In 1994, the banks operations for the preceding five years are reviewed and the review focuses mainly on BMOs fulfillment

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of its commitment. In this same year, the banks continuing commitment is further reaffirmed. Both the 1990 and the 1994 MTSs are dedicated to spell out the banks commitment and its fulfillment of this commitment. Later in 1995, Barrett indicates that he cannot imagine circumstances that could force the bank to change its commitment to the stakeholders whose needs are the driving force shaping and informing (BMOs) approach to the business of banking. In other words, this appears as a central theme in the banks discourse. With respect to whether the banks commitment is distinctive, what emerges from the data is that some aspects of its commitment are, in fact, distinctive, and these aspects are emphasized in discourse. For example, in 1992, a number of unique measures taken by BMO to serve small business customers are portrayed which include, but are not limited to, providing a lower lending rate than competitors for an extended period of time. By 1994, the bank indicates, it had become the highest-rated bank in Canada in the small business sector. Furthermore, it is indicated that the bank has established a reputation as a bank that is sensitive to the needs of its customers (1994 and 96) and its employees (1994). The banks distinctive fulfillment of its commitment to employees, for example, is portrayed in its building and opening of the IFL described as a unique facility in Canada and as the reason why 1994 will be remembered longest in the history of the bank. As another example, distinctive fulfillment of the banks commitment to shareholders is portrayed in each of the years starting with and following 1994 when the banks ROE is mentioned. By 1997, shareholders are told that your Bank is the only major bank in Canada and the United States to have produced ROE exceeding 14% for the last eight years. The above indicates that BMO does not claim to have fulfilled a distinctive general commitment to its stakeholder groups. However, it does claim to have achieved distinctiveness in fulfilling specific parts of this commitment. For example, it does not boast to have a distinctive level of service towards customers in general, but with respect to the small business customers. Neither does it portray itself as having a distinct relation with employees, but as having a unique institute for learning, an aspect of the bank-

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employee relationship which is distinctive. In other words, the bank narrows the area of activity to that in which it can claim to be distinctive. This again confirms Elsbach and Kramers (1996) claims that the criteria for which uniqueness is claimed are selectively chosen by organizations.

Continuity and change in the commitment to stakeholder theme Both change and continuity in the commitment to stakeholders theme can be observed. Let us start with the labels. The commitment label persists, but people in 1986 is replaced with stakeholders in 1990. Although here we see a partial change in labels, the interest groups to whom people and stakeholders refer are the same (customers, employees, shareholders and the community). With Barrett, not only is there a change in the label, but also in some aspect of the commitment. For example, in 1990, in articulating the banks commitment to each of the four stakeholders, some aspects of the commitment articulated in 1986 are maintained, others are dropped and still others are added. Here are a few of the issues added: with respect to the banks commitment to customers, a distinctive level of service is pledged to be given; with respect to shareholders a continuing and steadily increasing return on investment, in addition to an enhanced level of disclosure are promised; employees are said to be given the opportunity for a full and rewarding career; and communities are said to be entitled to services unique to their needs. None of these aspects of the banks commitment was mentioned in 1986. The commitment to stakeholders is enlarged and gets infused with new meanings when Barrett takes over as chairman. In the years following 1990, the bank portrays itself as having remained consistent to its pledges and as having fulfilled them. Thus, small business customers are portrayed as having received distinctive service from the bank (1992), the shareholders consistent and increasing returns (1994 to 1997), the employees rewarding and challenging careers (1994 and 1996), and the communities services unique to their needs (1994). In fact, throughout Barretts mandate, the commitment to stakeholders principle remains constant and persists. So does the banks presentation of its having fulfilled its commitment.

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Nevertheless, how the commitment is practiced, does change with time for some of the stakeholder groups. For example, in 1996, the bank declares that a new contract is being forged with employees. However, this is portrayed as part of the banks commitment to employees, namely its commitment to provide employees with challenging and rewarding careers. Here again, we see a persistence in the commitment label and principle but a change with time in how this commitment is practiced. In other words, the bank uses an ambiguous term which it interprets in varying ways depending on the occasion (Eisenberg, 1984), while maintaining the appearance of being consistent over time. Most of the changes in the meaning of the banks commitment to interest groups are incremental. The shifts are gradual and piecemeal when followed from year to year. For example, in 1990, in articulating the banks commitment to stakeholders, many of the terms of this commitment portrayed in 1986 were retained. An exception to the gradual change in the commitment theme appears with respect to the banks commitment to employees articulated in 1996. This is an instance where a major break with past attributes and themes appears to be intended. Consider the contrasts between the banking model and skills of the past and those of the present and future as presented in the 1996 MTS: The past traditional banking model of security and hierarchy steady decline in full-time transactionprocessing positions The present and future new kind of banking, a new contract

new skills increases in occupations such as the portfolio managers of mbanx, which did not exist a few years ago prosper(ing) in the new century

many employees are learning that their jobs will not be there paternalism of the past

professional relationship (whereby) employees are essentially entrepreneurs with their skills as their capital

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The past attributes are derided and presented in negative overtones (such as traditional, hierarchy, paternalism) whereas the present and future ones are presented with positive overtones (with terms as skills, professional). This is akin to the destruction of identity attributes described by Biggart (1977) in the case of a radical restructuring of an organization. Past identity attributes are destroyed and new ones are reconstructed. This presentation of past and future identity accompanies the banks introduction of mbanx which, in the bank publications (FirstBank News, Annual report, 1996), was portrayed as a revolutionary undertaking in the banks history. This is evident in the following quotation from the 1996 MTS: All these responses to change are significant in themselves. Together they equal the reinvention of the Bank, of which our new mbanx brand is the symbol. Interestingly, however, after the bank portrays the major breaks with the past, and addresses the reinvention of the bank, an element of continuity is mentioned: Yet as always amidst all the changes there will be a powerful element of continuity. The values of integrity, accountability and respect for human beings that permeate all our strategies will not change. They will be the foundations of a bank where all the factors of

production work in harmony to shape an enterprise that continuously builds on its own success for the benefit of all stakeholders. Like other references made to change, this one is followed by a reference to some element of continuity in the bank despite the change. At no point in time, do we find a complete destruction and reconstruction. The destruction, despite its magnitude, always seems partial. Furthermore, although Barrett mentions that a new contract is being forged with employees, he is persistent in affirming that working at the bank is challenging and rewarding. As mentioned above, this shows a consistency in the commitment the bank had made to employees in 1990. In other words, the new contract is portrayed as a change in the practice of a persistent principle. Thus, even when a major break is explicitly declared to be occurring, some of the statements of the bank indicate that a continuity with the past is maintained. In brief, we see a partial change in the label referring to the commitment to interest groups, a partial change in the meaning of this commitment, and a reference to a

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major change in this commitment portrayed as a change in the practice of a persistent principle. This confirms a number of authors allegations that when change is desired, it is often sought within a context of some continuity (Pettigrew, 1985; Whiting, 1976).

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To conclude, I would like to comment on a few general issues related to the banks identity in discourse that have emerged from the data. The discussion of the different BMO identity themes indicates that change in identity occurs at different levels. The labels used in the self-referential discourse may shift with time such as commitment to people Canadian North American commitment to stakeholders, and

NAFTA. Shifts in these labels are usually accompanied

by shifts in the meanings associated with the labels. In fact, even when the labels persist for some time such as commitment to stakeholders (from 1990 to 1997) and first (as of 1991), they often come to signify different issues as time passes. The labels persist, providing a sense of continuity, but the aspects of the bank that they define change with time. Most changes in the identity themes are incremental. The shifts in the reference to the geographic scope and the shifts in what the banks commitment to interest groups represents are generally piecemeal. In exceptional cases, the bank declares it is effecting a major change and creating a new order. This new order, however, is presented as conforming to a previously held identity theme: the new contract with employees makes work at the bank challenging and rewarding confirming a continuity in the banks commitment to employees. Furthermore, references to a change in an identity theme are often accompanied by references to continuity in a complementary theme. At no point in the banks discourse do we see a complete destruction of identity.

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6.3 GENERAL DISCUSSION

What similarities and differences can be found between the two banks? What do the findings allow us to say about identity evolution in top management discourse in general? The following table summarizes the general conclusions reached for RB and BMO and points out the similarities and differences between the two banks. General conclusions incorporating a comparison of the two banks follows afterwards.

Royal Bank -A shift in the attribute and/or the membership group evoked, and a continuity in the distinctiveness and/or the general principle depicted by the identity theme. (Example: Large) -Erosion of the identity theme with continued absence of external confirmation. (Example: Quality service)

Bank of Montreal -A shift in the attribute and/or the membership group evoked, and a continuity in the distinctiveness and/or the general principle depicted by the identity theme. (Example: Commitment to stakeholders) -Abortion of the projected identity theme with absence of external confirmation. (Example: Distinctive (overall) service to customers) -Persistent and indisputable distinctiveness of the theme. (Example: First as oldest)

-Erosion of centrality with erosion of distinctiveness in the theme. (Example: Quality service) -Institutionalization of themes that initially appeared as aspects of vision or strategic objectives (projected identity attributes). These themes get institutionalized as the organization takes strategic action and as its strategic achievements lead to a realization of these attributes. (Examples: Fee-andincome generating ability; FI)

-Institutionalization of themes that initially appeared as aspects of vision or strategic objectives (projected identity attributes). These themes get institutionalized as the organization takes strategic action and as its strategic achievements lead to a realization of these attributes. (Example: North American) -Actors impact on central identity attributes is explicitly addressed and is noticeable:

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(Mulholland and Barrett) -The process of identity change is evolutionary and incremental. (Examples: all themes) -Persistent use of the umbrella theme. This theme is associated with other themes that vary depending on the context. (Example: Leader) -Continuity is maintained through: the persistent utilization of a label. (Example: Leader) persistence of a given principle. (Example: Large) -The process of identity change is, in general, evolutionary and incremental. (Examples: all themes) - Persistent use of the umbrella theme. This theme is associated with other themes that vary depending on the context. (Example: First) -Continuity is maintained through: the persistent utilization of a label or expression. (Examples: First; Commitment to stakeholders) the persistence of a given principle. (Example: Commitment to shareholders) portraying innovation as an identity attribute of the bank addressing some persistent or enduring aspect of the bank after addressing change

6.3.1 Shifts in distinctiveness The two banks show a tendency to emphasize those attributes that allow them to claim distinctiveness within a comparison group. Different marks of distinctiveness appeared in discourse. RB places extensive emphasis on its size. In addition, when the public perception confirmed its higher rating in terms of service quality to customer, this attribute was extolled in the MTS. As conditions change, an organizations standing visa-vis a comparison group may also change. Thus, RBs relative size changed with time. As the banks rank in terms of size changes, the bank resorts to changing the criterion for measuring relative size. It also changes the comparison group used to determine its rank. This was evident as well in BMOs discourse. BMO did not claim to provide customers in general with a distinctive level of service, but rather to be the highest rated bank in terms of its service to small business, a subset of customers in general. Similarly, in claiming its distinctive North American scope, BMO had to consistently evoke both

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criteria: its full service capacity and its U.S. operations. This study confirms Elsbach and Kramerss (1996) allegations that organizations resort to selective categorizations in order to maintain a claim to distinctiveness. This is mainly due to the fact that organizations identity claims need to be confirmed by society (Levitt and Nass, 1994). Dutton and Dukerich (1991) indicate that an organization uses the image the public has of it (or what is called the construed external image by Gioia and Thomas, 1996) to adjust the way it views itself. This was evident in RBs portrayal of its quality service attribute. Initially, when confirmation for its distinctive service could be obtained through customer surveys, it proclaimed this mark of distinctiveness. As its distinctiveness eroded, so did its claims. Continuing to claim distinctiveness in this attribute in the face of eroding status would have created a dissonant situation for the different stakeholders. Similarly, BMO declared in 1990 that their goal was to provide a distinctive level of service to their customers. However, surveys of customer service ratings of the big banks did not show BMO to be superior to the other institutions. (The discussion of quality service for RB provides information on customer surveys on the Big Six banks including BMO and these do not show BMO as leading in customer service.) Nowhere does BMO claim to have actually realized the objective of providing distinctive overall customer service. Instead, BMO extols its superior service to small business, a subset of the overall customer group. For this claim, confirmation in the form of public opinion and survey results could be obtained. On the other hand, some organizational attributes are indisputably unique and the organization does not need to continually provide proof of their distinctiveness. This is the case with BMOs being the first and oldest bank in Canada. In fact, all organizations can make claims to distinctiveness on the basis of their history. As Selznick (1957) indicates, organizations develop a character as a result of their adaptive experiences, and no organizations experiences can be duplicated. Martin et al (1983) indicate that different organizations claims to uniqueness take similar forms, but that an organization is able to illustrate distinctiveness by referring to specific people, events and places that

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are unique to its experiences. This is more evident in BMOs discourse than in RBs. At BMO, the banks history and its being the first bank ever in Canada is a source of notoriety, a sign of distinctiveness by excellence one that cannot be disputed or disconfirmed. Distinctiveness, whether or not based on historical elements, is what allows an organization to stand out from the environment as opposed to being an extension of it (Christensen and Cheney, 1994). It is a sign of some superior achievement. It further allows the strengthening of stakeholders identification with the organization (Dutton et al, 1994.) Stakeholders can achieve a positive personal identity by being associated with a distinctive organization. We can thus understand why claims to distinctiveness in a wide array of aspects appear in this study as a major aspect of the banks selfpresentation. We can also understand why so much top management attention is focused on managing and presenting marks of distinctiveness.

6.3.2 Projected, realized and unrealized identity Projected identity may or may not become realized and institutionalized. Figure 12 shows the major aspects of the process of institutionalization, erosion or abortion of identity attributes. Early in the study period, RB had projected becoming a full service financial institution. It acquires a securities firm, and later a trust firm, it makes acquisitions in insurance and with the years provides more extensive financial products and services. In other words, the bank took a proactive stance vis-a-vis the FI attribute, first making it a desired projected attribute and then taking different actions to realize it. Achieving a full service FI status flowed partly from strategic actions at RB. A similar argument applies to BMOs Vision 2002 which projected BMO as a full service North American financial institution. Strategic action was undertaken which allowed the realization of this attribute. Constructing identity, however, does not always flow from the organizations strategic undertakings. For example, RB was partly curtailed in its efforts to become a full service FI by government regulations which, from the banks perspective, were slow in allowing it to move into new lines of business. In the case of quality service, RBs projected identity of

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being the leader in quality service in the early nineties was not realized despite the many efforts made at the bank. Similarly, BMO indicates in 1990 that its goal is to provide a

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Figure 12. Institutionalization/Erosion/Abortion of identity attributes

Institutionalization (Realized identity attribute)

Projected identity attribute

Strategic action

Achievement of desired attributes

Constraining or facilitating forces

Inability to achieve desired attribute

Erosion/Abortion (Fading of/unrealized identity attribute)

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distinctive level of service to customers. Several years later only its service to small business appeared particularly distinctive. In other words, while an organization may actively engage in efforts to build or manage its identity, there are factors which impact identity over which the organization may have no control. As the above discussion indicates, notable among these factors are government regulation and the perceptions of the organization held by external publics.

6.3.3 Shifts in centrality The data indicates that the central aspects of the organizations shift with time. The discussion so far has indicated that these shifts are often piecemeal when measured from year to year. The discussion has also pointed to a number of factors that influence the evolution of identity, allowing attributes to become more or less central with time. The factors that emerged in this study are: the major actors or top managers at the organization, a change in the banks strategy or strategic achievements, and a change in the external context. These forces are depicted in Figure 13. Not clearly evident in the case of RB, the influence of the chairman and CEO is highly noticeable in the case of BMO. Mulholland was the only Canadian bank executive to spearhead the acquisition of a retail bank in the United States and to lay the foundation for a North American bank. Barrett took that a step further by announcing Vision 2002. In addition, Barrett appeared to have infused the bank with a spirit of innovation. Creativity, learning, innovating and transforming became important themes in the banks discourse after he became CEO and chairman of the bank. As mentioned previously, Barrett himself was seen to possess the ability to learn and innovate. The discussion of BMO indicated that both Mulholland and Barrett as well as internal and external observers agree that the two CEOs had a major influence on the banks identity. The second factor influencing the evolution of the central aspects of identity is a change in the banks strategy or strategic achievement. In its self-presentation, RB initially refers to itself as a bank with the goal of becoming an integrated financial institution. Major strategic efforts are exerted to achieve the status of an integrated

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Figure 13. Factors that influence the evolution of organizational identity

Actors

Changes in strategy and strategic achievements

Evolution of organizational identity

Changes in the external context

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financial institution. RB reports extensively, for example, on the strategic acquisitions it makes in the various areas of the financial services sector, allowing it to narrow the gap between being a bank and being an integrated financial institution. Ashforth and Mael (1996) indicate that an organizations identity is typically anchored to its mission and MacMillan (1987) points out that we are what we do. At the end of the study period, RB refers to itself as a financial institution rather than a bank. The products and services the bank was offering at the end of the study period were substantially more varied and complex than those it offered at the beginning of the period. Its structure had grown more complex, its markets more varied and its name was changed to Royal Bank Financial Group. The banks strategic achievements and change in mission were related to a major aspect of its self-definition. A similar argument can be made about BMO. For example, the strategy it adopted with respect to the small business segment allowed it to achieve the status of the highest rated bank in this sector in Canada. Its major investment in Mexico, allowed BMO to become a NAFTA bank. Another factor which appears to have an influence on shifts in identity attributes is the external context. A major aspect of this context is the institutions relative position with respect to a comparison group, often made up of the major competitors. As the organizations position or rank changes with respect to the reference group, its statements of identity shift correspondingly. Thus, RB ceases to define itself as the bank which provides distinctive service and eventually presents itself as the institution with an exceptionally strong position in fee-based business. BMO comes to portray itself as the highest rated bank in the small business sector. Shifts in the banks external image are associated with shifts in identity.

6.3.4 Continuity and change What can we say about continuity and change in identity? Does identity persist or does it change with time? Should we uphold the definition of organizational identity as constituting of those attributes that persist? Persistence is part of the definition provided by Albert and Whetten (1985) and built upon by other authors (such as Ashforth and

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Mael, 1996; Dutton and Dukerich, 1991; Scott and Lane, 2000). Gagliardi (1986) proposed that organizations primary strategy is the maintenance of their identity. Srivastva and Fry (1992) claim that organizations change to maintain a sense of identity and continuity. Could we say that the findings of this study confirm these allegations? The data from the two banks indicates that some aspects of identity persist whereas others change with time. The findings of this study indicate that rather than making general statements regarding whether organizational identity persists or changes, researchers are well advised to look at the components of identity and attempt to differentiate between those aspects of identity that change and those that tend to endure. Let us summarize those aspects of identity that did change. The discussion of the different identity themes indicated that over the years, there were shifts in different aspects of identity: 1) The degree of centrality and distinctiveness of some themes changed over the years: RB: Quality service to customers; Fee-and-income generating ability BMO: First-as-innovative; Commitment to shareholders Changes in the degree of centrality of a theme are often accompanied by changes in the constellation that is associated with the theme. 2) Some labels by which organizations referred to their distinctive and central attributes evolved with time. RB: Bank FI BMO: Canadian North American NAFTA Commitment to people Commitment to stakeholders 3) Some of the meanings attached to the labels changed with time, whether or not the labels themselves remained constant: RB: Leader BMO: First; Commitment to stakeholders Most of the changes that did occur were incremental when looked at from year to year. In discussing the process of institutionalization of identity themes (fee-and-income generating ability and FI for RB; North American for BMO), I indicated that mainly piecemeal changes could be observed from year to year. Even the fading of some identity themes appears to take place gradually and undramatically (such as quality service for RB; first-as-oldest for BMO) as the banks address them less often.

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Furthermore, some changes entail gradual increases in complexity rather than shifts from one state to another. This is the case of the FI theme for RB which included but surpassed the bank theme, and the North American theme for BMO which included but surpassed the Canadian theme. In the case of the commitment to stakeholders theme at BMO, most shifts are also incremental. However, these shifts which appear to be small from year to year amount, in aggregate, to a change of significant magnitude. When the study period opened, RB defined itself as a Canadian bank distinctive for its quality service. When the period ends, it presents itself as a Canadian financial institution providing integrated services, distinctive in its ability to generate high revenues and income. When the study period opened, BMO defined itself as the oldest Canadian bank. When the period ends, it defined itself as a highly innovative North American (or NAFTA) financial institution. Although most aspects of discourse point to small shifts in identity on a year-toyear basis, a few aspects appear to point out to major changes occurring at the banks. RB makes less reference to such changes than does BMO. RBs indication that the

acquisition of Dominion Securities constituted a milestone in the Royals 118-year history is one of the few references made to change of some magnitude at the bank. BMO, in contrast, presents the changes occurring in the banks attributes as more dramatic, particularly with Barrett as chairman. He refers to small changes that together are equivalent to the re-invention of the bank, the groundbreaking initiatives of BMO, and a new contract to be forged with employees. It should be noted that BMO also explicitly addresses the issue of continuity in identity attributes more frequently than does RB. Could this lead us to conclude that a sense of occurring major changes is accompanied by a sense of continuity in some aspects of identity? Continuity was also observed to occur in identity themes in this study. Continuity is the sense of ongoingness that links the past to the present and the present to future hopes and ideals (Srivastva and Fry, 1992:2). It refers to a degree of sameness, primarily to sameness sustained through time (Bateson, 1992:27). We can think of

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continuity as streams from the past that flow into the present and future. The study indicates that continuity is established in discourse in a number of ways:

1) Through the use of labels which are used persistently throughout the years, even if the meanings they stand for may change with time: RB: Leader BMO: First; Commitment to stakeholders 2) Through meanings or principles that persist or that change minimally throughout the years RB: Large (relating to the retail network, for example) BMO: Commitment to shareholders (consistent returns, for example) 3) By addressing some enduring aspect of the bank after addressing a change: BMO: Commitment to employees (a new contract is forged, but the values of respect for all human beings remain). 4) By portraying innovation as an identity attribute of the bank: BMO: Innovative (the attribute persists and enables the bank to undertake changes of different magnitude and in different spheres of operations). There are very few situations (if any) where we cannot discern continuity in change (Bateson, 1992:27). This confirms what several authors have repeatedly indicated. Mobilizing the energy to engage in change requires that some aspects of a systems experience remain persistent (Pettigrew, 1985; Whiting, 1976). Schmiedeck (1979) talks about confluence: streams from the past and present that may combine and flow together in a cross section. At no point in time in the banks discourse do we see a complete destruction of the past. When major change is declared, some aspect of continuity is referred to. When incremental shifts occur, the severance with the past is only partial. In both cases confluence occurs. Yet this discussion implying that some continuity in identity can be observed should not mask the fact that most aspects of identity for these two organizations do not remain fixed for long periods of time. Gioia et al (2000) indicate that an organizations

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ability to change its identity should be seen as a sign of adaptive instability: it changes to adapt to its environment. In this study, we see a major tendency for organizational identity to undergo a continuous process of incremental change whereby the anchorage in the present is stronger than the anchorage in the past. Present anchorage helps fill the gap left by those aspects of the past that are discontinued (Schmiedeck, 1979). The discourse of both banks indicates that in their self-presentations, in answering the

question Who are we?, their overriding emphasis is on We are. today.

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7. CONCLUSION

Czarniawska-Joerges (1994) indicates that organizations have been engaged in a "search" for identity. This, she believes may be a problem rather than a solution in the definition of an organization's identity. Following Alasdair McIntyre, she proposes that a "quest" for identity is the better way to describe the process of autobiographical narration. "The quest suggests that what is sought after will be defined in large part through the process of formulation itself: it is not prepackaged" (Christensen and Cheney, 1994:225). This thesis was a stage in a quest to explore what happens to organizational identity in a context of change by using the grounded theory approach. The evolution of organizational identity in the top management discourse of two Canadian banks was traced for a longitudinal period of time during which these two organizations and their environment underwent many changes. Although this quest allowed me to answer some of the queries, it gave rise to many others. In this section I would like to review the contributions of the study, its limitations and the directions for future research that it opens up.

7.1 CONTRIBUTIONS This study has both, theoretical and practical implications. At the theoretical level, it was pointed out at the outset that organizational identity has generally been conceived in the organizational literature as being of an enduring nature. This study of two Canadian banks indicates that organizational identity is more prone to evolve and change than it is to persist. It further indicates that general statements about change and continuity in identity can mask the fact that there are specific components of identity which are likely to endure and other components which are prone to change.

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The developmental trajectories traced for different identity themes show that identity can evolve at the level of the labels which organizations use to define themselves, at the level of the meanings attributed to identity-defining labels, and at the level of the degree of centrality and distinctiveness of a given identity theme. A change in the centrality of a theme was shown to imply a change in the constellation of attributes associated with the theme. Changes in labels were shown to be incremental and to be accompanied, for the most part, by an increasing complexity in the particular themes to which the labels apply. Although a few studies reported in the literature suggest that organizational identity can change (Gioia and Thomas, 1996; Gustafson and Reger, 1995), no study has provided empirical evidence of the aspects of identity that change and those that persist. The study also pointed to a number of factors which are associated with the evolution of identity themes, some internal and others external, some appearing to propel the evolution of identity in the direction desired by the organization, others seemingly curtailing its development. This finding should be taken as suggestive of a few factors that may have an impact on identity. The findings of this study also point out how continuity is established in a context of change. Although researchers have repeatedly indicated that some continuity is needed for change to occur, few have provided empirical evidence of how continuity is maintained in organizations. It was found in this study that one way to maintain continuity is by defining the organization as innovative which would allow the organization to undertake different changes while maintaining a persistent self-definition. Other continuity maintaining strategies involve using the same self-defining labels over the years, labels that persist although they come to signify different meanings with time. A third continuity maintaining strategy entails addressing aspects of the organization which are persistent after change in the organization has been addressed. These continuity-maintaining strategies demonstrate the extent to which discourse itself provides the links between the past and the present. Far from simply portraying

continuity and change in identity, top management discourse helps create a state of

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continuity or a state of change. The findings indicate that the two organizations studied are mainly anchored in the present, with confluent streams from the past provided mainly through persistent use of labels and reference to continuity in discourse. This study also has practical implications. It sheds light on identity maintenance and change strategies used in organizations. The use of the term strategy here does not necessarily imply that these identity construction processes were intentional acts, although they may have been. Van Maanen (1978) indicates that the extent to which a particular strategy (such as a discursive strategy) is used by an organization is not a natural occurrence in itself. However, the form that it takes is a matter of organizational choice. And whether this choice of strategy is made by design or by accident, it is at least theoretically subject to rapid and complete change at the direction of management (Van Maanen, 1978:21). Similarly, Cheney (1983) indicates that formal messages from management may contain intended as well as unintended aspects. We do not know to what extent the strategies apparent in the annual reports were chosen intentionally. What we know is that particular strategies were evident. Making explicit the strategies used by management in its discourse can raise awareness of these techniques, specially if they come to be by accident. This study offers practitioners an array of strategies that can be used to maintain continuity or to create change in organizations.

7.2 LIMITATIONS AND FUTURE RESEARCH DIRECTIONS This study has a number of limitations. One such limitation derives from the fact that most of the data analyzed here has been taken from the annual reports. One could argue that these reports reflect only one of different versions of the organizations identity. The fact is that annual reports reflect the views of top managers, the group with pre-eminent responsibility for interpreting events to internal and external audiences, and therefore, the group most likely to exert an influence on this identity. Barr and Huff (1997:349) indicate that annual reports reflect and help create needed commonalities in the interpretation of issues. I propose that organizational identity is one such issue. Future research may attempt to study organizational identity elaboration processes in

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other public documents such as house organs, press releases or public statements by different company representatives and try to establish whether statements made to different audiences emphasize different aspects of identity. This study, like all research based on a small number of organizations, has the limitation of not allowing us to make generalizations at large. However, it does serve as a springboard for generating propositions and hypotheses that can be tested in larger scale studies. For example, future research may attempt to verify whether the developmental trajectories that emerged for identity themes in this study would occur in other organizations. Does identity tend to evolve incrementally with subsequent increases in complexity or are there other patterns that can be observed? Do the identity maintenance strategies that emerged in this study also occur in other change contexts? As interesting is the question of identity evolution for different types of organizations. The banks that were the focus of this study can be qualified as subscribing to a utilitarian logic as opposed to a normative one (Albert and Whetten, 1985). It would be interesting to find out how the identity of an organization that subscribes to a normative logic evolves, as conditions in its environment force it to review its normative requirements. To what extent will anchorage in the present, as opposed to the past, occur? This study raises a number of exciting questions that can be answered in future studies.

7.3 CONCLUSION As change becomes more prevalent inside and around organizations, the subject of organizational identity will continue to arouse the interest of researchers. This study indicates that an interesting venue for studying organizational identity longitudinally involves tracing an organizations self-presentational discourse. Although studies adopting such an approach have appeared in the communication literature, they have been ignored for the most part in the field of organizational studies. It is my hope that this

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study will stimulate further research into the subject of discourse on organizational identity. For me, the quest to understand the elusive subject of identity continues.

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