MT4 - Organisational Structures and Design

Question 1

Chandler (1990)

Answer 1

Firms can expand by:
- Scale - cheaper to produce more products (capital-intensive industries)
- Scope - more products from the same materials
Multiunit hierarchical organisational structure
Functional departments like production, marketing, finance, R&D
Growth:
- Horizontally: mergers and acquisitions
- Vertically: Acquisitions upstream and downstream
- Geographical expansion
- Product diversification

Question 1

Weick (1993)

Answer 1

The collapse of sencemaking during the Mann Gulch Disaster
Constant communication creates cohesion and mutual trust
Shared meanings lead to strong frameworks and structure
close ties lead to clearer thinking under pressure
Team-building also builds resilience to sudden disasters
Managerial capitalism - decisions are made by managers instead of owners

Question 2

Hannan and Freeman (1984)

Answer 2

As organisations age, they tend towards structural inertia
Organisational structures must be highly reproducible
Selection is emphasized over adaptation

Question 3

Mintzberg (1981)

Answer 3

Organisation design should emerge from the deep understanding of an organisation
No one-size-fits-all solution (fashionable trends of consultants)
Culture, external environment, strategic goals should be considered

Question 4

Hoskisson (1987)

Answer 4

Results of the implementation of the M-form in:
- Unrelated-diversified firms: improved returns and reduced risk
- Vertically integrated firms: no obvious improvement
- Related diversified firms: limited profits
Cause: divisional interdependence

Question 5

Fligstein (1985)

Answer 5

5 Types of Firms: can cross over
o Unitary: manufacturing, sales, marketing departments
o Functional: divided across task lines: fishing, shipping, selling
o Geographical
o Holding: small central office acts as portfolio manager and each subunit is independent
o Multidivisional Form (MDF): Different product divisions, each with unitary structure, Central office for long term planning and financial allocation
Chandler (1962) says there are 3 basic strategies for growth
o Horizontal: ends up in unitary
o Vertical: ends up in functional
o Diversification: ends up in MDF
Two types of diversification: unrelated and related products
Some industries were more likely to diversify due to cyclical nature and technologies that naturally led to diversification
Unitary and functional do a bad job managing these various products due to confusion

Question 6

DiMaggio and Powell (1983)

Answer 6

• 3 ways that isomorphism happens
o Coercive: through politics and problem of legitimacy
- Formal or informal pressures, such as social pressure or invitations to join in collusion
- Government mandates
o Mimetic: from standard responses to uncertainty
- When tech is poorly understood, goals are ambiguous, or environment creates uncertainty, organizations may model themselves after others
- Can happen implicitly by hiring of people from other firm, or explicity through consultants
o Normative: professionalization
- Professionals all share a formal education and are members of professional networks
- This leads to isomorphism among the individuals
- Professional career tracks are so closely guarded that the top executives end up the same by the time they get up there
• Same background and career path