Organizational Theory

"Until the mid-1970s, the prominent approach in organization and management theory emphasized adaptive change in organizations. In this view, as environments change, leaders or dominant coalitions in organizations alter appropriate organizational features to realign their fit to environmental demands (e.g. Lawrence and Lorsch 1967; Thompson 1967; Child 1972; Chandler 1977; Pfeffer and Salancik 1978; Porter 1980; Rumelt 1986). Since then, an approach to studying organizational change that places more emphasis on environmental selection processes, introduced at about that time (Aldrich and Pfeffer 1976; Hannan and Freeman 1977; Aldrich 1979; McKelvey 1982), has become increasingly influential. The stream of research on ecological perspectives of organizational change has generated tremendous excitement, controversy and debate in the community of organization and management theory scholars. Inspired by the question, Why are there so many kinds of organizations?"

"Organizational design often focuses on structural alternatives such as matrix, decentralization, and divisionalization. However, control variables (e.g., reward structures, task characteristics, and information systems) offer a more flexible approach. The purpose of this paper is to explore these control variables for organizational design. This is accomplished by integration and testing of two perspectives, organization theory and economics, notably agency theory. The resulting hypotheses link task characteristics, information systems, and business uncertainty to behavior vs. outcome based control strategy. These hypothesized linkages are examined empirically in a field study of the compensation practices for retail salespeople in 54 stores. The findings are that task programmability is strongly related to the choice of compensation package. The amount of behavioral measurement, the cost of measuring outcomes, and the uncertainty of the business also affect compensation. The findings have management implications for the design of compensation and reward packages, performance evaluation systems, and control systems, in general. Such systems should explicitly consider the task, the information system in place to measure performance, and the riskiness of the business. More programmed tasks require behavior based controls while less programmed tasks require more elaborate information systems or outcome based controls."

"Organization design is conceived to be a decision process to bring about a coherence between the goals or purposes for which the organization exists, the patterns of division of labor and interunit coordination and the people who will do the work."

"In today's volatile world, organizational design is an everyday, ongoing activity and challenge for every executive, whether managing a global enterprise or a small work team. Globalization, worldwide competition, deregulation, and ever-new technologies drive the ongoing reassessment of the organization. The executive response has been many new forms of organizational design: virtual, learning, modular, cellular, network, alliance, or spaghetti – to name a few. New organizational forms challenge old ways of organizing for efficiency and effectiveness. Yet fundamental design principles underlie any well-functioning organization. Organizations still require a formal design."

"Hierarchical organizations are typically run by... little Napoleons and Napoleonettes; especially at mid-organization level... A hierarchical organizational design draws leadership focus and energy away from problem solving and progressive thinking by encouraging those climbing the organizational food chain to focus instead on protecting their positions, perks, and territory."

"By far the most difficult skill I learned as a C.E.O. was the ability to manage my own psychology. Organizational design, process design, metrics, hiring and firing were all relatively straightforward skills to master compared with keeping my mind in check."

"This article [entitled A framework for the comparative analysis of organizations (1967)], was one of three independent statements in 1967 of what came to be called "contingency theory." It held that the structure of an organization depends upon (is ‘contingent’ upon) the kind of task performed, rather than upon some universal principles that apply to all organizations. The notion was in the wind at the time."

"Organizational design is the body of knowledge and techniques that seeks to offer useful advice to organizations about their structures (and other aspects) needed to attain their goals."

"Furthermore, the drain of a depression upon the reserves of business puts a disproportionate strain upon the modestly capitalized small enterprise. Without such small enterprises our competitive economic society would cease. Size begets monopoly. Moreover, in the aggregate these little businesses furnish the indispensable local basis for those nationwide markets which alone can ensure the success of our mass production industries. Today our smaller corporations are fighting not only for their own local well-being but for that fairly distributed national prosperity which makes large-scale enterprise possible. It seems only equitable, therefore, to adjust our tax system in accordance with economic capacity, advantage and fact. The smaller corporations should not carry burdens beyond their powers; the vast concentrations of capital should be ready to carry burdens commensurate with their powers and their advantages."

"One of the hardest-to-down myths about the evolution of mass production at Ford is one which credits much of the accomplishment to 'scientific management.' No one at Ford—not Mr. Ford, Couzens, Flanders, Wills, Pete Martin, nor I—was acquainted with the theories of the 'father of scientific management,' Frederick W. Taylor. Years later I ran across a quotation from a two-volume book about Taylor by Frank Barkley Copley, who reports a visit Taylor made to Detroit late in 1914, nearly a year after the moving assembly line had been installed at our Highland Park plant. Taylor expressed surprise to find that Detroit industrialists 'had undertaken to install the principles of scientific management without the aid of experts.' To my mind this unconscious admission by an expert is expert testimony on the futility of too great reliance on experts and should forever dispose of the legend that Taylor's ideas had any influence at Ford."

"Wealth in the modern world does not come merely from individual effort; it results from a combination of individual effort and of the manifold uses to which the community puts that effort. The individual does not create the product of his industry with his own hands; he utilizes the many processes and forces of mass production to meet the demands of a national and international market."

"When our food and clothing and housing all are born in the complication of mass production, mass method is bound to get into our thinking and to eliminate all other thinking. In our time mass or collective production has entered our economics, our politics, and even our religion, so that some nations have substituted the idea collective for the idea God."

"Consider, for example, the mechanical precision with which many of our institutions are expected to operate. Organizational life is often routinized with the precision demanded of clockwork. People are frequently expected to arrive at work at a given time, perform a predetermined set of activities, rest at appointed hours, and then resume their tasks until work is over. In many organizations, one shift of workers replaces another in methodical fashion so that work can continue uninterrupted twenty-four hours a day every day of the year. Often, the work is very mechanical and repetitive. Anyone who has observed work in the mass-production factory or in any of the large “office factories” processing paper forms such as insurance claims, tax returns, or bank checks will have noticed the machine-like way in which such organizations operate. They are designed like machines, and their employees are in essence expected to behave as if they were parts of machines."

"But what would become of mass production and its system of financial expansion if technical perfection, durability, social efficiency, and human satisfaction were the guiding aims. The very conditions for current financial success — constantly expanding production and replacement — works against these ends. To ensure the rapid absorption of its immense productivity, megatechnics resorts to a score of different devices: consumer credit, installment buying, multiple packaging, non-functional designs, meretricious novelties, shoddy materials, defective workmanship, built-in fragility, or forced obsolescence through frequent arbitrary changes of fashion. Without constant enticement and inveiglement by advertising, production would slow down and level off to normal replacement demand. Otherwise many products could reach a plateau of efficient design which would call for only minimal changes from year to year."

"Both pure and applied science have gradually pushed further and further the requirements for accuracy and precision. However, applied science, particularly in the mass production of interchangeable parts, is even more exacting than pure science in certain matters of accuracy and precision."

"Growing up it all seems so one-sided Opinions all provided The future pre-decided Detached and subdivided In the mass production zone Nowhere is the dreamer or the misfit so alone"

"It's curious," he went on after a little pause, "to read what people in the time of Our Ford used to write about scientific progress. They seemed to have imagined that it could be allowed to go on indefinitely, regardless of everything else. Knowledge was the highest good, truth the supreme value; all the rest was secondary and subordinate. True, ideas were beginning to change even then. Our Ford himself did a great deal to shift the emphasis from truth and beauty to comfort and happiness. Mass production demanded the shift. Universal happiness keeps the wheels steadily turning; truth and beauty can't..."

"A whole day's journey—didn't mean to do it. We just became so involved in things that we forgot about God. And that is the danger confronting us, my friends: that in a nation as ours where we stress mass production, and that's mighty important, where we have so many conveniences and luxuries and all of that, there is the danger that we will unconsciously forget about God."

"Just as modern mass production requires the standardization of commodities, so the social process requires standardization of man, and this standardization is called equality."

"Mass production and mass distribution claim the entire individual, and industrial psychology has long since ceased to be confined to the factory."

"To make more products for people who wanted to express themselves would mean creating variety. But the systems of mass production that had been developed in America were only profitable if they made large numbers of the same objects. This had fitted perfectly with the limited range of desires of a conformist society. The expressive self threatened this whole system of manufacturing."

"The invention of typography confirmed and extended the new visual stress of applied knowledge, providing the first uniformly repeatable “commodity,” the first assembly-line, and the first mass-production."

"There he goes. One of God's own prototypes. Some kind of high powered mutant never even considered for mass production. Too weird to live, and too rare to die."

"Any customer can have a car painted any colour that he wants so long as it is black."

"Organizational theory is based on a culture's answers to questions about the self."

"Institutional theories of organization provide a rich, complex view of organizations. In these theories, organizations are influenced by normative pressures, sometimes arising from external sources such as the state, other times arising from within the organization itself. Under some conditions, these pressures lead the organization to be guided by legitimated elements, from standard operating procedures to professional certification and state requirement, which often have the effect of directing attention away from task performance."

"The process of theory construction in organizational studies is portrayed as imagination disciplined by evolutionary processes analogous to artificial selection. The quality of theory produced is predicted to vary as a function of the accuracy and detail present in the problem statement that triggers theory building, the number of and independence among the conjectures that attempt to solve the problem, and the number and diversity of selection criteria used to test the conjectures."

"The industrial way of life leads to the industrial way of death. From Shiloh to Dachau, from Antietam to Stalingrad, from Hiroshima to Vietnam and Afghanistan, the great specialty of industry and technology has been the mass production of human corpses."

"Another forerunner of modern organization theorists was Andrew Ure, a professor of chemistry. An enthusiastic proponent of “the factory system,” Ure (1835) took a step beyond Adam Smith. Whereas Smith’s pin factory was solely an example of division of labor, Ure pointed out that a factory poses organizational challenges. He asserted that every factory incorporates “three principles of action, or three organic systems”: (a) a “mechanical” system that integrates production processes, (b) a “moral” system that motivates and satisfies the needs of workers, and (c) a “commercial” system that seeks to sustain the firm through financial management and marketing. Harmonizing these three systems, said Ure, was the responsibility of managers."

"“Organization theory,” a term that appeared in the middle of the twentieth century, has multiple meanings. When it first emerged, the term expressed faith in scientific research as a way to gain understanding of human beings and their interactions... The term “organization theory” also indicated an aspiration to state generalized, abstract propositions about a category of social systems called “organizations,” which was a very new concept."

"This is an age of mass production. In the mass production of materials a broad technique has been developed and applied to their distribution. In this age, too, there must be a technique for the mass distribution of ideas."

"The modern period in organization theory is characterized by vogues, heterogeneity, claims and counter-claims."

"Theory is a dirty word in some managerial quarters. That is rather curious, because all of us, managers especially, can no more get along without theories than libraries can get along without catalogs — and for the same reason: theories help us make sense of incoming information."

"Technology has always been a central variable in organizational theory, informing research and practice. Despite years of investigative effort there is little agreement on the definition and measurement of technology, and no compelling evidence on the precise role of technology in organizational affairs. I will argue that the divergent definitions and opposing perspectives associated with technological research have limited our understanding of how technology interacts with organizations, and that these incompatibilities cannot be resolved by mutual concession. What is needed is a reconstruction of the concept of technology, which fundamentally re-examines our current notions of technology and its role in organizations."

"Classical organization theory suffers from "": It ignores the significance of the political, social, and economic milieu in shaping organizations and influencing managerial practice."

"The domain of organization theory is coming to resemble more of a weed patch than a well-tended garden. Theories of the middle range (Merton, 1968; Pinder and Moore, 1979) proliferate, along with measures, terms, concepts, and research paradigms. It is often difficult to discern in what direction knowledge of organizations is progressing — or if, it is progressing at all. Researchers, students of organization theory, and those who look to such theory for some guidance about issues of management and administration confront an almost bewildering array of variables, perspectives, and inferred prescriptions."

"From the beginning, the forces of light and the forces of darkness have polarized the field of organizational analysis, and the struggle has been protracted and inconclusive. The forces of darkness have been represented by the mechanical school of organizational theory— those who treat the organization as a machine. This school characterizes organizations in terms o£ such things as:"

"Two centuries ago Leibnitz invented a calculating machine which embodied most of the essential features of recent keyboard devices, but it could not then come into use. The economics of the situation were against it: the labor involved in constructing it, before the days of mass production, exceeded the labor to be saved by its use, since all it could accomplish could be duplicated by sufficient use of pencil and paper. Moreover, it would have been subject to frequent breakdown, so that it could not have been depended upon; for at that time and long after, complexity and unreliability were synonymous."

"Market capitalism is the best thing that ever happened to the common man. The rich have always had access to entertainment, often in the comfort of their palaces and mansions. The rich have never had to experience the drudgery of having to beat out carpets, iron their clothing or slave over a hot stove all day in order to have a decent dinner. They could afford to hire people. Capitalism's mass production and marketing have made radios and televisions, vacuum cleaners, wash-and-wear clothing and microwave ovens available and well within the means of the common man; thus, sparing him of the boredom and drudgery of the past. Today, the common man has the power to enjoy much (and more) of what only the rich could afford yesteryear."

"Organizational theories have three origins: Max Weber’s original work on bureaucracies which came to define the theory for sociologists, a line of theory based in business schools that had as its focus, the improvement of management control over the work process, and the industrial organization literature in economics. Unlike many fields in sociology, organizational theory has been a multidisciplinary affair since World War II, and it is difficult to understand its central debates without considering its linkages to business schools and economics departments."

"To some, organizational theory is a field of study; to others, it is the process of using metaphorical language to describe organizational processes."

"Organizational theory is one of the most vibrant areas in sociological research. Scholars from many subfields, (medical sociology, political sociology, social movements, education) have felt compelled to study organizational theory because of the obviously important role that complex organizations play in their empirical research. But scholars who do not do organizational theory are often struck at how arcane the debates are within organizational theory. They also think most of organizational theory is about firms and thus, the theory does not seem to have much application to other kinds of social arenas."

"Traditional organizational theories have tended to view the human organization as a closed system. This tendency has led to a disregard of differing organizational environments and the nature of organizational dependency on environment. It has led also to an over-concentration on principles of internal organizational functioning, with consequent failure to develop and understand the processes of feedback which are essential to survival."

"Today perhaps the most popular organizational theory is ."

"Organization theory is the branch of sociology that studies organizations as distinct units in society. The organizations examined range from sole proprietorships, hospitals and community-based non-profit organizations to vast global corporations. The field’s domain includes questions of how organizations are structured, how they are linked to other organizations, and how these structures and linkages change over time. Although it has roots in administrative theories, Weber’s theory of bureaucracy, the theory of the firm in microeconomics, and Coase’s theory of firm boundaries, organization theory as a distinct domain of sociology can be traced to the late 1950s and particularly to the work of the Carnegie School. In addition to sociology, organization theory draws on theory in economics, political science and psychology, and the range of questions addressed reflects this disciplinary diversity. While early work focused on specific questions about organizations per se – for instance, why hierarchy is so common, or how businesses set prices – later work increasingly studied organizations and their environments, and ultimately organizations as building blocks of society. Organization theory can thus be seen as a family of mechanisms for analysing social outcomes."

"The concept of leadership has an ambiguous status in organizational practice, as it does in organizational theory. In practice, management appears to be of two minds about the exercise of leadership. Many jobs are so specified in content and method that within very broad limits differences among individuals become irrelevant, and acts of leadership are regarded as gratuitous at best, and at worst insubordinate"

"If you peruse the table of contents of a textbook on organizational theory or search the web for courses in organizational sociology, you cannot help but notice how many of the key contributors to the field spent time at Stanford between 1970 and 2000, as faculty members, post-docs, or graduate students... Of the five most influential macro-organizational paradigms in play today — institutional theory, network theory, organizational culture, population ecology, and resource dependence theory (in alphabetical order) – Stanford served as an important pillar, if not the entire foundation, for all but network theory. By the 1990s, it became an important site for network theory as well."

"The models of management which individuals and organizations use come from a variety of sources. Sometimes the model comes from a theory. The theory may emerge from someone's thoughts about the desired characteristics of a manager, or about the characteristics of competent managers. Sometimes the model comes from a panel. A group of people, possibly in the job or at levels above the job within the organization, generates a model through discussion of what is needed to perform a management job competently."

"Until the mid-1970s, the prominent approach in organization and management theory emphasized adaptive change in organizations. In this view, as environments change, leaders or dominant coalitions in organizations alter appropriate organizational features to realign their fit to environmental demands (e.g. Lawrence and Lorsch 1967; Thompson 1967; Child 1972; Chandler 1977; Pfeffer and Salancik 1978; Porter 1980; Rumelt 1986). Since then, an approach to studying organizational change that places more emphasis on environmental selection processes, introduced at about that time (Aldrich and Pfeffer 1976; Hannan and Freeman 1977; Aldrich 1979; McKelvey 1982), has become increasingly influential. The stream of research on ecological perspectives of organizational change has generated tremendous excitement, controversy and debate in the community of organization and management theory scholars. Inspired by the question, Why are there so many kinds of organizations?"

"The approach that dominates organizational theory, teaching, and practice for most of the twentieth century looked at organizations from the top-down, starting with a view of the CEO as the "leader" who shapes the organization's strategy, structure, culture, and performance potential. The nature of work and the role of the workforce enter the analysis much later, after considerations of technology and organization design have been considered. However, if the key source of value in the twenty-first-century organization is to be derived from the workforce itself, an inversion of the dominant approach will be needed. The new perspective will start not at the top of the organization, but at but at the front lines, with people and the work itself — which is where value is created. Such an inversion will lead to a transformation in the management and organization of work workers, and knowledge. This transformation was signalled by McGregor, but we must go further."