1/18/2010
Summary of Organizations and OrganizingContents
Chapter 1: The Subject is Organizations: The Verb is Organizing
The Elements of Organizations
Chapter 2: Organizations as Rational Systems
Taylor and Scientific Management
Fayol and Administrative Theory
Weber and Theory of Bureaucracy and Authority
Simon and Theory of Administrative Behaviour
Chapter 3: Organizations as Natural System
Major Contributions To Natural System
Barnard’s Cooperative System
”Hawthorne effect”
Parsons’s AGIL Schema
Selznick’s Institutional Approach
Chapter 4: Organizations as Open Systems
Organizations as Cybernetic Systems
Organizations as Loosely Coupled Systems
Organizations as Hierarchical Systems
Chapter 5: Combining Perspectives, Expanding Levels
Contingency Theory
Thompson’s Levels of Model
Scott’s Layered of Model
Chapter 6: Conceptions of Environment
Organizational Groupings
Environment Typologies
Subjective vs. Objective Definitions of Environments
Organizations and Environments
Chapter 7: Creating Organizations
Various Theoretical Perspectives on the Emergence of Organizations
Chapter 8: Goals, Power and Control
Organizational Goal &The Dominant Coalition
Anarchies, Adhocracies & Learning
Control Systems
Authority
Chapter 9: The Dyadic Enviroment of Organization
Transaction Cost Economics
Resource Dependence Theory
Chapter 10: Organization Environment
Population Ecology
The New Institutional Approach
Chapter 11: Networks In and Around Organizations
Interlock Networks
Indirectly Networks
Chapter 12: Strategy, Structure, and Performance: The Sociology of Organizational Strategy
Forces Shaping Industry Competition
Threat of entry by new competitors
Intensity of rivalry among existing competitors
Chapter 13: The Rise and Transformation of the Corporate Form
Changing Forms of Organizations
Railroads
Corporations in the 20th Century
Chapter 14: Changing Contours of Organizations and Organization Theory
From Unitary to Multiparadigm
From Monocultural to Multicultural Studies
From Present – Centered to Longitudinal and Historical Analysis
From Micro to Macro Units and Levels of Analysis
From Structure to Process
Chapter 1: The Subject is Organizations: The Verb is Organizing
Organizations play a leading role in our modern world. This presence affcets – some would insist that the proper term is infects – virtually every sector of ceontemporary social life. What organizations do?, how they changed and how people have thought about them questions will be solved with this summary.
The Elements of Organizations
Organization charts are enormously useful but convey only a small part of what we mean by “organizations.” There have been many models that render the diversity and complexity of organizations manageable by focusing on a few central dimensons- somewhere between an organization chart and actual organization.
The Essential Ingredients
Essential ingredients of organizations are environment, strategy and goal, work and technology, formal and informal organization.
Environments are all those of significant elements outside the organization that influence its ability to survive and achieve its ends.
Strategy describes the choices organizations make about which markets or clients the organization intends to serve, the basis on which it competes in its domain.
Works describes the tasks that the organization needs to accomplish given the goals it has set for itself.It includes the character of the work flows and the level of interdependece among the parts of the organization.
To focus on the technolgy of an organization is to view the organization as a place where energy is applied to the transformation of materials, as a mechanism for transforming inputs into outputs.
Formal Organization codify more or less explicitly how they do their work and how their parts relate to each other. Informal organization refers to the emergent characteristics of the organization that affcet how the organization operates. This includes the organization’s culture, norms, and values: social networks inside and outside the organization; power and politics; and the actions of leaders.
Culture describes the pattern of values, beliefs, and expectations more or less shared by the organization’s members.
Three contrasting definitions of organizations have arisen, each associated with one of three perspectives on organizations: the rational, natural, and open system. The first definition views organizations as highly formalized collectivities oriented as social systems, forged by consensus or conflict, seeking to survive. And the third definition views organizations as activities involving coalitions of participants with varying interests embedded in wider environments. The three definitions frame analytically useful, if partial, views of organizations based on differing ontological ceonceptions. And all three perspectives, albeit in varying combinations, continue to guide and influence the ways we think about organizations and organizing.
Chapter 2: Organizations as Rational Systems
The two prominent characteristics of rational systems are:
Goal Specificity:
Goals are conceptions of desired ends. In the rationalistic view, it is important that goals are clearly defined and are not vague. Vague goals do not provide a solid basis for formal organisations.
Formalisation:
A structure is formalised:
- to the extent that the rules which are governing behaviour are precisely formulated
- to the extent that roles and role relations are prescribed independently of the personal attributes and relations of the individuals, who are occupying these positions in the organisation.
Taylor and Scientific Management
Replace rule-of-thumb work methods with methods based on a scientific study of the tasks.
Scientifically select, train, and develop each worker rather than passively leaving them to train themselves.
Cooperate with the workers to ensure that the scientifically developed methods are being followed.
Divide work nearly equally between managers and workers, so that the managers apply scientific management principles to planning the work and the workers actually perform the tasks.
These principles were implemented in many factories, often increasing productivity by a factor of three or more. Henry Ford applied Taylor's principles in his automobile factories, and families even began to perform their household tasks based on the results of time and motion studies.
Fayol and Administrative Theory
Fayol was a qualified engineer and also held a high position industry: managing director of a large French company. A year after the death of Taylor, he published his most famous book entitled: General and Industrial Management
While Taylor reorganized from "bottom up", administrative theorists looked at productivity improvements from the "top down". Early influencers were Henri Fayol (1949 trans.), Mooney and Reiley (1939) and Gulick and Urwick (1937).
Fayol attempted to develop a science of administration for management. In contrast to a later management expert, Peter Drucker, he believed that there was a universal science of management applicable to commerce, industry, politics, religion, war or philanthropy. He was not a theoretician and was one of the first practicing managers to draw up a list of management principles
Fayol thought that his principles would be useful to all types of managers. He truly advocated the notion that if a manager wants to be successful, he only needs a certain set of management principles. If a manager climbed the corporate ladder and reached higher positions, this manager would depend less on technical knowledge and more knowledge of administration. When Fayol worked on his principles in France, Taylor’s scientific management was developing “independently” in the USA. Although he was trained as an engineer, he brilliantly realized that management of an enterprise required skills other than those he had studied.
Weber and Theory of Bureaucracy and Authority
Max Weber wrote about the emergence of rationality in the West by comparing and contrasting differing cultures and historical periods.
His typology on authority -- traditional, rational-legal, and charismatic -- proposed that rational-legal authority was becoming the dominant system (supplanting traditional authority) through the modern state and capitalism, mainly due to it's "purely technical superiority over any other form of organization".
Traditional Authority -- resting on the established belief of sanctity of traditions and legitimacy of those exercising authority under them
Rational-legal authority -- resting on a belief of the legality of patterns of normative rules and the right of those elevated under those rules to issue commands
Charismatic authority -- resting on devotion to sanctity, heroism, and character of a person, and the normative rules ordained by him or her.
Bureaucracy arose by sub-dividing the functions that the owner-managers originally did themselves such as supervision, personnel selection, accounting and financial management, record keeping, job design, and planning.
Simon and Theory of Administrative Behaviour
Simon (1976) clarified the processes by which goal specificity and formalization contribute to rational behavior in organizations (Scott p. 45). He criticized Fayol's platitudes and Taylor's "economic man" assumptions, proposing the "administrative man" who pursues his self-interests but often doesn't know what they are, is aware of only some of the possible decision alternatives, and is willing to settle for an adequate solution than continue looking for an optimal one
Simon distinquishes between the decisions a person makes to enter or leave an organization and the decisions they make as a participant. Organizations simplify decisions and support participants in the decisions they need to make.
Organizations simplify decisions by restricting the ends toward which activity is directed. Goals supply the value premises that underly decisions. Value premises (assumptions of desirable ends ) are combined with factual premises to make decisions. The more precise the value premises, the greater effect they have on decisions.
Participants in high positions make decisions with a higher value component, people in lower positions make decisions with a higher factual component. The top makes "what" decisions, the bottom "how" decisions. Choice of ends can only be validated by fiat or consensus, choice of means empirically.
While goals are often vauge, they can serve as the starting point for a series of mean-ends chains where one develops a set of means for the overall goal, redefines each mean as a sub-goal, and then develops means for the sub-goal, branching until the means are activities.
Each goal in the means-end hierarchy is an end to things below it and a mean to those above it. Activities can only be evaluated against the goals above it. Goals can be delegated to different units which simplifies the decision making process for participants. Scott notes that "from this perspective, an organization's hierarchy can be viewed as a congealed set of means-ends chains promoting consistency of decisions and activities throughout the organization".
According to Perrow (1986), Simon's model stresses unobtrusive control of participants through training, information, standard operating procedures, etc. -- channeling of attention and information.
Simon also notes the cognitive limitations of decision makers through his and March's concept of bounded rationality (March and Simon, 1958).
Overall, Simon helps us understand how the decisions of hundreds or thousands of individuals in an organization can be directed toward ultimate orgnizational goals.
When comparing the various schools, important differences in the approach to the normative structure can be identified:
Taylor: pragmatic approach, bottom up –method
Administrative theory group: lees pragmatic & more prescriptive, belief in general principles
Weber was less concerned with discovering methods to improve organisation but was trying to define characteristics of the bureaucratic structures
The 4 schools used different levels of analysis, Taylor and Simon used the social psychological level, while Fayol (administrative theory group) and Weber worked at structural level
Characteristics of the rationalistic perspective:
Control is the means of challenging and co-ordinating behaviour in order to achieve specified goals
Structure is celebrated, action is ignored
Chapter 3: Organizations as Natural System
Organizations are collectivities (not existed to rational)
Specificity and Formalization as characteristics differentiating organizations from other types of collectivities (rational) but shared with the social group (natural)
Organizational goals and their relation to the behavior of participants are much more problematic.
Two general themes characterize of organizational goals:
There is frequently a disparity between the stated and the “real” goals pursued by organizations.
When the stated goals are actually being pursued, they are never the only goals governing participants’ behavior
Two Types of Explanations have been proposed to account for the survival instincts of organizations:
The Organizations are social systems charecterized by a number of needs that must be satisfied if they are to survive.
Other theorists reject such assumptions as being anthropomorphic at worst and unnecessary at best. They suggest instead that one does have to posit a survival need for the collectivity it self.
The main difference between the two perspective scholars background
The rational and the natural analysts concentrated on different types of organizations
The rational system analysts were more likely to investigate industrial firms and state bureaucracies, while the natural system analysts tended to focus on service and professional organizations-schools, hospital, and voluntary organizations
Rational system theorists
only selected aspects of behaviors of participants are relevant to the organization.
Natural system theorists:
Such behaviors have an impact on the task behavior of participants and hence are emprically relevant to an understanding of organizational behavior
Organizations as social contexs affect the participants’ well being, a situation that has normative significance to anyone concerned with bettering the human condition.
Major Contributions To Natural System
Barnard’s Cooperative System
Barnard stressed that organizations are essentiallay cooperative systems, integrating the contributions of their individual participants.
Organizations rely on the willingness of participants to make contributions.
Many ideas that are consistent with a rational system conception of organizations what sets them apart is his insistence on the nonmaterial, informal, interpersonel, and, indeed moral basis of cooperation.
The most critical ingredient to successful organization is the formation of a collective purpose that becomes morally binding on participants. Developing and imparting a mission is the distinctive “function of the executive.”
The necessity of survival can override the morality of purpose.
”Hawthorne effect”
Between 1924 and 1932, at a factory called the Hawthorne Works, (a Western Electricmanufacturing facility outside Chicago IL, U.S.A.), a series of experiments on factory workers were carried out.
Hawthorne Works had commissioned a study to see if its workers would become moreproductive in higher or lower levels of light. It was found that the workers' productivity seemed to improve when changes were made and slumped when the study wasconcluded. It was suggested that the productivity gain was due to themotivational effectof the interest being shown in them.
However, it was then found that subjects improved their performance inresponse NOTto changes in experimental manipulation in illuminationof their task area BUT simply inresponse to the fact that they are being studied. In 1955, the term was coined by HenryA. Landsberger when analyzing the experiments from 1924-1932.
In a 2009 reassessment of the original data, University of Chicago economists John Listand Steven Levitt found that productivity varied due to other factors such as the weeklycycle of work or the seasonal temperature and so the initial conclusions wereoverstated and the effect was weak or illusory.
Although illumination research of workplace lighting formed the basis of the Hawthorneeffect, other changes such as maintaining clean work stations, clearing floors ofobstacles, and even relocating workstations resulted in increased productivity for short periods of time.
In appropriate sense, the Hawthorne effect is a term used toidentify any type of shortlived increase in productivity.
Parsons’s AGIL Schema
He developed a very explicit model detailing the needs that must be met if a social system is to survive. The model is identified AGIL.
Selznick’s Institutional Approach
He was a student of bureaucrarcy under Merton at Colombia but an intellectual descendant of Michels and Bernard, developed his own unique system model, one that has recently been refurbished and elaborated to constitute an influential approach to the analysis of organizations known as institutional theory.
“The important thing about the organizations is that, though they are tools, each nevertheless has a life of its own.”
He agrees rational system except:
individuals who participate in the organization as “wholes” rather than acting merely in terms of their formal roles
Organizational structures that include the formal aspects but also the complex informal systems that link participants with one another and with others external to the official boundaries
Institutionalization: The process by which an organization “takes on a special character” and “achieves a distinctive competence or, perhaps a trained or built – in capacity”(Selznick 1996)
Thus institutionalization refers to a morally neutral process: “the emergence of orderly, stable, socially integrating patterns out of unstable, loosely organized or narrowly technical activities” Selznick argued that teh most significant aspect of institutionalization is the process by which structures or activities become “infused with value beyond the technical requirements at hand”
He views organizational structure as an adaptive organism shaped in a reaction to the characteristics and commitments of participants as well as to influences from the external enviroment