Organizational Theory

"Although students of management would readily agree that there have been problems of management since the dawn of organized life, most would also agree that systematic examination of management, with few exceptions, is the product of the present century and more especially of the past two decades."

"TQM is a philosophy for managing an organisation in a way which enables it to meet stakeholder needs and expectations efficiently and effectively, without compromising ethical values."

"The more you hardwire a company on total quality management, [the more] it is going to hurt breakthrough innovation... The mindset that is needed, the capabilities that are needed, the metrics that are needed, the whole culture that is needed for discontinuous innovation, are fundamentally different."

"Markets are institutions that exist to facilitate exchange, that is, they exist in order to reduce the cost of carrying out exchange transactions. In an economic theory which assumes that transaction costs are nonexistent. markets have no function to perform, and it seems perfectly reasonable to develop the theory of exchange by an elaborate analysis of individuals exchanging nuts for apples on the edge of the forest or some similar fanciful example. This analysis certainly shows why there is a gain from trade, but it fails to deal with the factors which determine how much trade there is or what goods are traded."

"Quality means meeting customers' (agreed) requirements, formal and informal, at lowest cost, first time every time."

"Low cost relative to competitors becomes the theme running through the entire strategy, though quality, service and other areas cannot be ignored."

"There are in the Exhibition some beautiful examples of such amongst the productions of other countries as well as of our own. They are made by the united labour of many women. The cost of a piece of lace will consist of:"

"In the 1970s and 1980s, business processes were redesigned on average once every seven years. This rate of change was easy for the IT department to follow. The time needed to alter the information systems that supported new or changed business processes stayed within acceptable limits. In the 1990s, the rate of change began to increase and information systems began to lag behind. In 2000, a manager succinctly remarked: “We can completely redesign our business processes every three months and subsequently our IT department needs a year to catch up with the supporting information systems.”"

"Innovative e-business projects start with a design of the e-business model. We often encounter the view, in research as well as industry practice, that an e-business model is similar to a business process model, and so can be specified using UML activity diagrams or Petri nets. In this paper, we explain why this is a misunderstanding. The root cause is that a business model is not about process but about value exchanged between actors. Failure to make this separation of concerns leads to poor business decision-making and inadequate business requirements."

"True heroism is remarkably sober, very undramatic. It is not the urge to surpass all others at whatever cost, but the urge to serve others at whatever cost."

"Microeconomics, including the study of individual choice and of group choice in market and nonmarket processes, has generally been considered a field science as distinct from an experimental science. Hence microeconomics has sometimes been classified as "non-experimental" and closer methodologically to meteorology and astronomy than to physics and experimental psychology... But the question of using experimental or nonexperimental techniques is largely a matter of cost, and generally the cost of conducting the most ambitious and informative experiments in astronomy, meteorology, and economics varies from prohibitive down to considerable. The cost of experimenting with different solar system planetary arrangements, different atmospheric conditions, and different national unemployment rates, each under suitable controls, must be regarded as prohibitive."

"The Current Approaches to Management Theory and Science"

"A business process is a series of steps designed to produce a product or service. Most processes (...) are cross-functional, spanning the ‘white space’ between the boxes on the organization chart. Some processes result in a product or service that is received by an organization's external customer. We call these primary processes. Other processes produce products that are invisible to the external customer but essential to the effective management of the business. We call these support processes."

"One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head: to make the head requires two or three distinct operations: to put it on is a particular business, to whiten the pins is another ... and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which in some manufactories are all performed by distinct hands, though in others the same man will sometime perform two or three of them."

"The superior gratification derived from the use and contemplation of costly and supposedly beautiful products is, commonly, in great measure a gratification of our sense of costliness masquerading under the name of beauty."

"In general terms, transactions costs are the costs that arise when individuals exchange ownership rights to economic assets and enforce their exclusive rights. A clear definition of transactions costs does not exist, but neither are the costs of production in the neoclassical model well defined."

"Building the house of quality requires six basic steps:"

"Over the past decade, I have watched more than 100 companies try to remake themselves into significantly better competitors. They have included large organizations (Ford) and small ones (Landmark Communications), companies based in the United States (General Motors) and elsewhere (British Airways), corporations that were on their knees (Eastern Airlines), and companies that were earning good money ((Bristol-Myers Squibb). Their efforts have gone under many banners: total quality management, reengineering, right-sizing, restructuring, cultural change, and turnarounds. But, in almost every case, the basic goal has been the same: to make fundamental changes in how business is conducted in order to help cope with a new, more challenging market environment."

"It is also worth noting that it is extremely difficult to be a great buyer of complementary competencies if you do not have any knowledge about the stuff you are acquiring. Friedrich Nietzsche pointed out that a man has no ears for that to which experience has given him no access. We need knowledge to be able to outsource knowledge."

"International trade in goods and services has expanded steadily over the past six decades thanks to declines in shipping and communication costs, globally negotiated reductions in government trade barriers, the widespread outsourcing of production activities, and a greater awareness of foreign cultures and products. New and better communications technologies, notably the Internet, have revolutionized the way people in all countries obtain and exchange information."

"To date, most research on information technology (IT) outsourcing concludes that firms decide to outsource IT services because they believe that outside vendors possess production cost advantages. Yet it is not clear whether vendors can provide production"

"This is a challenge to the entire trade union movement in Ireland - a declaration of war on the wages and working conditions of all workers."

"[Formal structures of formal organizations] never succeed in conquering the non-rational dimensions of organizational behavior."

"Organisational Behaviour (OB) is the study of human behaviour in organisational setting, the interface between human behaviour the organisation, and the organisational itself. Although we can focus on any one of these three areas, do remember that all three are ultimately relevant for a comprehensive understanding of organisational behaviour. For example, we can study individual behavior without human behavior and explicitly considering the organization. But because the organization influences and is influenced by the individual, we cannot understand the individual's behavior completely without learning something about the organization."

"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”:"

"Paul R. Lawrence [was] a renowned sociologist and a pivotal figure in the intellectual history of who was one of the world's most influential and prolific scholars in the field of organizational behavior."

"Argyris’s work raises profound questions about how organizations run, and casts doubt on what is widely accepted as good practice. But he offers management a profound exploration of the fundamental principles of organizational behavior and human interaction in the workplace."

"It can be argued that the U.S. brokerage and investment banking industry has transformed the modern American stock market into nothing more than a mechanism for transferring wealth from shareholders to management."

"The economic fate of a corporation, like that of other business enterprises, is ultimately controlled by individual consumers. But most consumers may be no more interested in taking on management responsibility than stockholders are. Nor is it enough that those consumers who don’t want to be bothered don’t have to be. The very existence of enhanced powers for non-management individuals to have a say in the running of a corporation would force other consumers and stockholders to either take time to represent their own views and interests in this process or risk having people with other agendas over-ride their interests and interfere with the management of the enterprise, without these outsiders having to pay any price for being wrong."

"Berle and Means’ book remains the point of departure and the central reference for reflection about corporate governance. It has given rise to differing, even contradictory interpretations, which explains how it could be used in support of opposing theories, notably on the question of the relationship between shareholders and managers. Thus, it has been used to argue in favor of the shareholder conception that is now dominant, even though it contains, as we shall see, a conception of the corporation that is radically different to the contractualist view that underpins the current doctrine of shareholder primacy."

"[...] limits on shareholder democracy correlate with both unusually good and unusually poor corporate performance [...], suggesting that democracy limits both extremes."

"These efforts to induce dissent in corporate boardrooms are likely to be unpopular with some CEOs, just as discussants and referees were initially controversial in academia. But opposition politicians, counterargument in courts, and referees do seem to deliver better decisions, and so might corporate boardrooms subjected to more shareholder democracy and accountability."

"A sovereign government's budget is not like the budget of a household or firm. Governments issue the currency, whereas households and firms use the currency. As the chartalist, or modern money approach, explains, modern governments actually spend by crediting bank accounts. It really just amounts to a keystroke, pushing a key on a computer that generates an entry on someone’s balance sheet. Government can never run out of these keystrokes."

"Henri Fayol (1949) is generally considered as the father of planning. As early as 1917, he led a nationally owned French mining concern from the brink of bankruptcy to international dominance. This was clearly the result of his development of a specific system. This system involved forecasts from various levels and persons within the organization. Managers from each level submitted their best estimates of the coming years activity and, based on this information, the Chief Executive Officer would make up a one to five year plan. Financial evaluations and control of departments were then based upon these projections. Based on the business practices and policies of 1917, this was a radical and unsettling approach. Prior to Fayol’s innovation, the charisma and entrepreneurial abilities of the firm’s leadership was believed to be the major factor leading to its success. As more firms became corporations and the size of business entities continued to grow, Fayol’s planning approach became widely accepted. General Motors adopted this approach (during the 1930s and 1940s and provided an excellent example of this (Sloane, 1963) in the United States. Since World War II, the evolution of planning approaches can be viewed as three distinct phases (Camillus, 1986). The first of these phases lasted through the 1950s and was, in actuality, an evolution of Fayol’s approach. Its base of operation was in the accounting department of a business. Budgeting and financial projections were used by management to develop future projections and to control operational decisions. From this writer’s experience, this appears to he the primary planning process used in the field of child and youth care today. How many of our present day agencies are operated (in reality) by a business office..."

"This theory maintains that the objectives of the firm should be derived by balancing the conflicting claims of the various 'stakeholders' in the firm: managers, workers, stockholders, suppliers, vendors. The firm has a responsibility to all of these and must configure its objectives so as to give each a measure of satisfaction. Profit which is a return on investment to the stockholder is one of such satisfactions, but does not receive special predominance in the objective structure,"

"Why have stockholders?... What contribution do they make, entitling them to heirship of half the profits of the industrial system, receivable partly in the form of dividends, and partly in the form of increased market values resulting from undistributed corporate gains? Stockholders toil not, neither do they spin, to earn that reward. They are beneficiaries by position only. Justification for their inheritance must be sought outside classic economic reasoning.... [and] can be founded only upon social grounds... that justification turns on the distribution as well as the existence of wealth. Its force exists only in direct ratio to the number of individuals who hold such wealth. Justification for the stockholder's existence thus depends on increasing distribution within the American population. Ideally the stockholder's position will be impregnable only when every American family has its fragment of that position and of the wealth by which the opportunity to develop individuality becomes fully actualized."

"All that most economists know about Herbert Simon is that he wrote about bounded rationality and organizational behavior."

"[For] the first time in the history of humanity... you have just had a single empire [the United States of America], so dominant, whose military budget is higher than the military budgets of the next 15 countries put together, and whose military-industrial complex itself is the eleventh largest economic entity in the world. This is the reality we live in, and this is the reality which confronts us in different ways."

"is, of course, a made-up word designed to call attention to the various functional elements of the work of a chief executive because "administration" and "management" have lost all specific content. POSDCORB is made up of the initials and stands for the following activities:"

"An organization which depends solely upon its blueprints of prescribed behavior is a very fragile social system."

"Budgeting is a math exercise, number crunching. Planning is a logical, linear process. Strategizing requires a great deal of information about customers and competitors, along with conceptual skills. Visioning uses a very different part of the brain than budgeting. As the name implies, it involves trying to see possible futures. It inevitably has both a creative and emotional component (e.g., “How do we feel about the options?”). When you use “orthodox planning” to create a vision, frustration and failure are inevitable."

"Performance appraisal (PAR) in public organisations is the appraisal committee's impersonal evaluation of the public service rendered by publicservants in their impersonal capacity in a public setup; hence there is nothing "personal" about PAR."

"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?"

"Strategy is about stretching limited resources to fit ambitious aspirations."

"Without competitors there would be no need for strategy, for the sole purpose of strategic planning is to enable the company to gain, as efficiently as possible, a sustainable edge over its competitors. Corporate strategy, thus, implies an attempt to alter a company's strength relative to that of its competitors in the most efficient way."

"Big industry, competition and generally the individualistic organization of production have become a fetter which it must and will shatter. ... It makes unavoidably necessary an entirely new organization of society in which production is no longer directed by mutually competing individual industrialists but rather by the whole society operating according to a definite plan and taking account of the needs of all."

"The purposes of functional charts is"

"If a man divides the whole of his work into two branches and delegates his responsibility, freely and properly, to two experienced heads of branches he will not have enough to do. The occasions when they would have to refer to him would be too few to keep him fully occupied. If he delegates to three heads he will be kept fairly busy whilst six heads of branches will give most bosses a ten hours' day. Those data are the results of centuries of the experiences of soldiers."

"Formal theories of organization have been taught in management courses for many years, and there is an extensive literature on the subject. The textbook principles of organization — hierarchical structure, authority, unity of command, task specialization, division of staff and line, span of control, equality of responsibility and authority, etc. — comprise a logically persuasive set of assumptions which have had a profound influence upon managerial behavior."

"Business strategy is the battleplan for a better future."