Organizational theories Flashcards
classical approaches
• Organizational orders are the central coordination mechanism for organizations:
The behavior of organizational members can only be coordinated by organizational orders and hierarchy.
• Deviations from organizational orders are regarded as disturbance: should be eliminated by supervision of organizational members.
- employees agree to predetermined organizational order (labor contract)
- focus on inner organizational factors (ignores environmental influences)
- Homogenous job requirements (inflexible rules)
bureaucracy approach
- Weber considers organizations as a union considering of commands and allegiance
- organizations are not a group of people but a combination of roles and tasks
• Ligation of rules
• Strict delimitation of authority and responsibility: Division of labor • Fixed system of under- and super-orders (hierarchy)
• Documentation of all administrative proceedings
• Administrative impersonality
–> should run like well-oiled machine, members perform with precisions of highly trained military unit
Administrative approach: What Managers Do
- Fayol describes what managers should do like planing, leading, organizing, coordination, controlling
- 8 organizational principles:
1. Labor division –> specialization advantage
2. Authority + responsibility = concentrated
3. Discipline (members should respect all conventions)
4. Unity of command = every member should be subordinate to 1 supervisor
5. Unity of management = all efforts, etc. should be directed at a common objective
6. Centralization = decision made at central place
7. Hierarchy = structural arrangement of positions within organization
8. Order = employees are organized at fixed location
Scientific management
Taylor says planning and task execution should be separated; high level of labor differentiation
Neoclassical approach
- -> Behavioral scientific approaches led to be reorientation for original theories; more attention to human factors
- -> Hawthorne studies managers recognize the powerful effect of individual needs, groups dynamics on job performance
- informal working groups exist within formal working group
- workers are more responsive to social forces of peer groups than controls and incentives of management
Human relations approach
- Based on Hawthorne studies focusses on socio-emotional factors which influence the performance of organizational members; in contrast to classical approaches
- performance is not only determined by compensation and working conditions, also human relations
- recognize and include informal relationships between organizational members
- -> emotions are now regarded as positive sources of productivity, employees like to be included and improve own working conditions
Incentive contribution theory
- Barnard suggests organizations are precarious systems of activities; considers importance of external relationships to organizations
Theory ist characterized by:
- Incentives + contribution: Contribution = activities carried out by organizational members incentives (rewards) are provided, if none are provided members will reduce contribution, so organization should provide good incentives
- Coalition: Strict demarcation are no longer feasible (as proposed by classical approach); all internal and external stakeholders acting jointly like political coalition
- Authority + influence: depends on voluntary willingness of organizational members to cooperate and accept organizational requests; members accept only legitimized authority
- Informal structures: Informal organizational structure = efficient communication mechanism between members and as motivating factors; integration of individual expectation
Modern approaches
- -> in contrast to classical and neoclassical approaches are modern approaches competitively heterogeneous integrate manifold perspectives and partially compete against each other;
- no coherent framework integrating all modern approaches
Human resource approach
- based on human relations approach
- organizational structures are no longer regarded as fixed settings but subject to structural change to promote motivation
- -> inflexible structure leads to waste of human resource; better way;
human resource approach accentuates the development of new organizational structures, which
- consider human needs and allow more efficient use of Human Resources
Organizations should promote:
- individual development opportunities,
- team work,
- self-control,
- manifold communication mechanism
- confidence in interpersonal relationships
structuralist approach
- follow up Webers classical theories, proposes systematic categorization of organizational structure explains variances between organizational design and classifies designs
- -> formalization of organizations
- -> high level of formal dimensions indicate low level of bureaucracy and the other way; different level of bureaucracy exists; environmental dynamics, control, technology, location and interdependencies influence organizational design
decision theory approaches
- focuses on decisions and their influence on organizational structure
- assumes rationality of decisions
1. Empirical analysis -> explanation of observable decision processes and considering influence of organizational regulations on decision making processes
2. mathematical approach -> derive optimal structure (organizational decisions on the design)
3. microeconomic approach -> transaction cost economics, property rights approach (explains organizational boundaries, hierarchy, employees interests)
principle agent approach (organizational problems are due to unequally distributed/different information)
System theory approaches
- organizations are systems consisting of connected elements
- focusses on the internal structure of systems (organizations).
1. cybernetic perspective -> systems = closed loops which are coordinated by rules and programs –> mechanical view
2. Structural - functional perspective –> system needs to reduce complexity by implementing structural forms - enable labor divisions to simplify and better management - is due to complexity of environment
3. self-referential perspective –> relationship between systems (organizations) and environment is not deterministic but interactive
These perspectives led to three influential organizational theories:
• Resource-based theory
• Evolutionary theory
• Theory of Interactional Relationships between Systems
Resource based theory
- system depend on external suppliers which deliver resources:
- this dependence causes uncertainty which has to be reduced in order to maintain their position
Evolutionary theory
surviving system are an evolutionary result of adapting organizational structures to cope with environmental changes
Theory of interactional relationships between systems
focusses on relationship between systems and external partners
