Power, knowledge and change: investigating the dynamics of regulatory change from a Foucauldian perspective

The factors that facilitate or impede the implementation of change in organisations have receivedconsiderable attention in the academic literature. Much of the literature has attempted to identifythe reasons for failed change initiatives. There is, therefore, a well-documented body of ‘bestpractice’ knowledge that should guide managers when introducing a change management project.However, despite the existence of this literature many change projects still fail.In addition, the change management literature fails to investigate the influence of power on theunderlying organizational meaning systems and how meaning systems influence local powerstructures. Foucault argues that the meaning systems in which people exist guide how truth isproduced and subsequently what is constituted as knowledge. For Foucault, ‘truth production’ andthe dynamics of knowledge are situated in a theory of power. This study responds to Foucault’ssuggestion that knowledge should be re-examined in the change management literature to betterunderstand the interlinked nature of power and knowledge. The study adopts Foucault’s regimes oftruth perspective and analyses the interplay between power and knowledge at both theorganizational and industry levels.The worst economic crisis in recent times has seen widespread calls for better regulation andsupervision of the international financial system. Regulatory change is becoming increasingly morecommon especially in the banking industry. However, because the record of implementation ofregulatory banking changes in developing countries has been particularly poor it was thought thatthis area would provide a fertile domain for regulatory change management research.Consequently, this research project has two main aims: To identify the impact of Foucault’sregimes of truth on the sharing of knowledge within banks and across the local banking industry ofa developing country during the implementation of the Basel II regulatory framework; and toexamine the influence of knowledge sharing on the level of success associated with the Basel IIimplementation within the banks.This research project produced several key findings. Foucault’s regimes of truth and the interplayof power and knowledge were found to be influencing political manoeuvring, the level of interdepartmentaltrust and level of coordination within banks and between stakeholder organisationsin the local industry. These regimes were also found to be facilitating and impeding the sharing ofknowledge during the implementation of Basel II regulation. Consequently, the Basel IIimplementation was affected by the dynamics of the organizational regimes. Additionally, it wasalso recognized that the dynamics of regimes at the organisational level were influenced byindustry level regimes.In summary, this study has emphasised the importance of considering the interplay of power andknowledge to ensure success when implementing regulatory change. These results will be ofparticular interest to regulators and banks in developing countries, change managementpractitioners and to the wider academic community. A series of practical recommendations arepresented at the end of the thesis.