THEORIES Flashcards
• Agency Theory (Principal Agent Theory)
• Agency Theory (Principal Agent Theory)
➢ Places its analytic focus on the relationships between and among workers inside the organization.
➢ Assumption
▪ Social life is characterized by a series of contractual relationships.
▪ The principal-buyer and agent-seller have good information about the value of the product or services, by which a mutually agreeable or appropriate price can be set.
• Agency Theory (Principal Agent Theory)
➢ Issues
• Agency Theory (Principal Agent Theory)
➢ Issues
▪ Individuals are self interested and the best way to utilize that self interest in such a way that it works to the advantage of all parties is to establish mutually beneficial contracts as the basis of any exchange relationship.
▪ Moral hazard - the situation in which an employer really cannot be sure if an employee is doing his or her job or not.
▪ Doesn’t seem to sufficiently recognize the reverse problem – exploitation of agents: misrepresentation of work, safety and the required skills needed by managers or supervisors.
▪ ASSUMES that principals are at the mercy of agents but fails to give consideration to how principals can control information to the detriment or agents.
• Agency Theory (Principal Agent Theory)
➢ Critique
• Agency Theory (Principal Agent Theory)
➢ Critique
▪ Leveled at most economic theory and that is that self interest is insufficiently precise to be useful as an analytical tool.
• Any behavior can be described as self interested.
• Agency Theory (Principal Agent Theory)
➢ FACTORS that contribute to inhibit self interested behavior
• Agency Theory (Principal Agent Theory)
➢ FACTORS that contribute to inhibit self interested behavior
▪ The extent of ongoing, direct interactions with others.
▪ The use of individual versus group rewards as a means of performance management and compensation
▪ The application of individual or group performance evaluation processes
▪ The presence of independent work processes by comparison to team or collaborative processes
▪ The presence of stable, generalized hierarchy or other authority structures.
• Network Theory
• Network Theory
➢ Focus in the relationship between the organization and its wider environmental field, or its relationship to other organizations.
➢ ASSUMES the organization to be open to the environment.
➢ The processes and functions that are central to the theory reflect that the organization itself is always engaged in exchange relationships with the wider environment.
▪ Networking between orgs is a bridging strategy that enables orgs to build greater security and stability through interdependence.
▪ Wicked Problems – those that include a wide range of political, economic, and social problems.
• Characterized by conflicts in which stakeholders bring significantly difference perspectives to the table.
• Contingency Theory (Structural contingency theory)
• Contingency Theory (Structural contingency theory)
➢ There is no best way to organize a corporation, to lead a company, or to make decisions.
➢ The optimal course of action is contingent upon the internal and external situation.
➢ A contingent leader effectively applies his own style of leadership to the right situation.
➢ Organizational structures cannot be universalized.
• Contingency Theory (Structural contingency theory)
• Contingency Theory (Structural contingency theory)
➢ CORE IDEAS
▪ Katz & Kahn – sees organizations as being open to the environment and as such, needing strategic and intentional management to satisfy and balance internal needs and to adapt to environmental circumstances.
▪ There is no one best way of structuring or organizing.
• Depends on a variety of factors, including the nature of the organizations tasks or operations and the nature of the environment in which the organization operates.
▪ Several dimensions of the organization that reflect the influence of the environment.
• The tasks within the organization (range from highly standardized to rapid change)
• Close attention to the organization of work, communication systems, and the nature of authority.
❖ Clarity of roles in the organizations, positions, clear structure, and hierarchy versus interactive, ambiguous, and varied organization or structure.
• Structural Functionalism
• Structural Functionalism
➢ Primary findings of the Hawthorne studies
➢ Efforts to understand the complexity of not just individual behavior but social behavior.
➢ What is the source of this stability and order?
➢ How is it sustained and or changed over time?
• Structural Functionalism
• Structural Functionalism
➢ CONCERN
▪ Social structures and institutions in society broadly and organizations more narrowly.
▪ Social structures are stable, repeating patterns of behavior.
▪ Formal structures
• Ones in which the social positions, roles, and relationships among them have been explicitly specified and are defined outside the characteristics or relations of those occupying the positions.
▪ Informal structures
• Likely to emerge unintentionally and be closely linked to the individuals and relationships in a group at any point in time.
➢ Standardized social and cultural beliefs (structures), and the behaviors derived from such beliefs, serve some need or function.
• Human and Group Relations Theories
• Human and Group Relations Theories
➢ Social and group dynamics of social and organizational settings.
➢ ASSUMPTIONS
▪ Much greater complexity in the expressions of and the causes behind human behavior.
▪ The causes or motivations for human behavior are far more complex than is recognized by classical theorists.
▪ The factors that shape behavior can be both formal and explicit, or informal and implicit.
▪ Organizations are more than the sum of their parts and that members of organizations actually cooperate rather than merely work in parallel.
• Business Process Reengineering
• Business Process Reengineering
➢ The examination and redesign of work flows and work processes.
➢ Intended to help organizations fundamentally rethink how they do their work as a means of substantially improving performance in areas of customer service, expenditures, or resource use as a means of becoming more competitive and more efficient.
• Business Process Reengineering
• Business Process Reengineering
➢ ASSUMPTIONS
▪ Vision proceeds obliteration.
▪ Managers as well as leaders have a full understanding of work processes.
▪ Need for and availability of unabridged, unbiased, and definite evaluation criteria.
• Burke-Litwin Change Model
• Burke-Litwin Change Model
➢ Open systems framework
➢ Organization is grounded in and open to the wider environment and that its relationship with that environment is characterized by a basic input throughput output feedback loop cycle.
• Burke-Litwin Change Model
• Burke-Litwin Change Model
➢ ASSUMPTIONS
▪ The organization is open to its environment and receives direct and important feedback from the environment.
▪ Complex set of relations between critical attributes of the organization
▪ Relationships between attributes are highly complex and variable and largely mechanically causal.
• Resource Dependence Theory
• Resource Dependence Theory
➢ Organizations are dependent on the environment for resources necessary for their ongoing activities, and at the most basic level, their survival.
