ORGANIZATIONAL THEORIZINGMGT 6381- Advanced Organizational Theory

Author: Mike Reed Professor and Associate Dean Cardiff Business School (Wales) Research

Theoretical development in organizational analysis

Managerial/professional/expert work New forms of work organization and control Changing forms of organization and

management in UK public services

Early organization literature Viewed organizations as rational,

streamlined structures Separate out the values + emotions in

organizations Like Frederick Taylor “The One Best Way”

Fused the individual and the collective Somewhat utopian? Do we still see organizations in this light?

We are at a juncture We are in a period of “revolutionary”

science Normal – puzzle solving Revolutionary – Assumptions being

challenged, internal conflict, critique, reevaluation

Three possible responses Retreat to orthodoxy Embrace diversity and discontinuity Retell the history of OT

Time and theorizing Theory

Historically located Constantly evolving Acceptance and impact depends on

receptiveness of the academic community Theory making

“assembling and mobilizing ideational, material and institutional resources to legitimate certain knowledge claims and the political projects that flow from them”

Dynamism in theorizing Despite ongoing debate, still a basis for

evaluating new knowledge “Grounded Rationality”

Negotiated rules and norms for generation of new knowledge

Vocabulary and grammar of organizational analysis

Perhaps not as ubiquitous as in hard sciences

Is the academic community an institution?

Historical Themes Rationality Integration Market Power Knowledge Justice Network

Rationality Logic of organization

Technical function defines socio-economic location, authority, behavior of everyone

Social order based on organization Not randomly assigned, birthright, etc

Basically, a rationally constructed artifice Frederick Taylor’s “One Best Way” approach

Is this true everywhere? Dictatorships? Family businesses?

Rationality “Human beings become the raw material to be

transformed by modern organizational technologies into well-ordered productive members of society unlikely to interfere with the long-term plans of ruling classes and elites”

What do you think? Is this a reasonable theory given what you know of

modern organizations?

Challenges to Rationality Simon (1945): Bounded rationality

Author Reduced to rationality to individual cognitive processes “Politics, culture, morality, and history are significant

by their absence of bounded rationality” Do you agree with this de minimis statement

about bounded rationality? Inability to deal with dynamism Instability of complex organizations Doesn’t address problem of social integration

and maintain social order

Big OT questions: Why do organizations exist? Why are firms the same/different? What causes changes in organizations? Why do some firms survive and others

don’t? Emerging issue?

Integration Why do people cooperate in organizations?

HR perspective Management as benevolent and socially

skilled Didn’t like tunnel-vision of rationalism

Organizations adapt to changes in environment to help restore equilibrium where rational model pitches “one best way”

Organizations help integrate individuals into wider society

Integration Borrowed Systems Theory from natural

sciences Structural functionalism

Internalist focus on Org Design... But external concern on env. Uncertainty Need the right fit between the two to survive

Conflicts over valued means and ends into technical issues that can be solved through effective design and management Frictional elements in an otherwise perfectly

functioning system?

Integration Can organizations’ ills really be fixed

through socio-organizational differentiation/ functional systems analysis?

Major output: Contingency theory Use social engineering and flexible org

designs to solve major institutional and political problems.

Drawbacks Social, economic and political reality didn’t

comport to the theories.

Big OT questions: Why do organizations exist? Why are firms the same/different? What causes changes in organizations? Why do some firms survive and others

don’t? Emerging issue?

Market If markets behave in neoclassical ways…

…then there’s no need for organizations. Fortunately for us, they don’t

Organizations form when markets fail Market theory tried to integrate rational

and integration approaches Rational: Bounded Rationality,

Efficiency/Effectiveness Integration: Organizations must respond to

their environment

Market Two major theories arose

Transaction Cost Economics Organizations formed by internalizing transactions

based on transaction costs Organizations respond to environment to maximize

efficiency Population Ecology

Competitive pressures influence organizational design Both:

design, functioning and development as outcomes of universal and immanent forces – can’t be changed by strategic action

Market More attention to resource allocation as a

determinant of organizational behavior and design Shortcomings

Doesn’t talk much of social power or agency Unitary social and moral order in which individual and

group interests and values are simply derived from overarching “system interests and values” uncontaminated by sectional conflict and power struggles.

No emphasis on community, public service, and social concern – all you have to do is respond to market demands

Big OT questions: Why do organizations exist? Why are firms the same/different? What causes changes in organizations? Why do some firms survive and others

don’t? Emerging issue?

Power Most overused and least understood Roots (interplay of both)

Social power Human Agency

Former theories Too deterministic Too unitary

If deployed properly, creates and recreates a hierarchy of autonomy and dependence

Power Two perspectives

Max Weber – Theory of domination (Institutional)

Machiavelli – Organizational Politics (Processual)

Key difference between the two approaches: Processual (bottom-up)

asks how people lower on the totem pole sway/gain power over those above them.

Examples: unions? collective bargaining?

Power Three faces of power:

Episodic - observable conflicts of interest between identifiable social actors with opposing objectives

Manipulative – behind the scenes activity through which powerful groups manipulate decision-making agenda to screen out issues that may threaten their control

Hegemonic – strategic control of existing ideological and social structures in constituting and limiting the interests and values (and thus action options) available No longer a human phenomenon, now ideas have power

Power Field tried to synthesize institutional and

processual perspectives by looking at ‘expert’ discourses and practices Which particular patterns of organizational

structuring and control are established in different societies/sectors?

A key shortcoming: Doesn’t deal with the material cultural and

political complexities of organizational change

Big OT questions: Why do organizations exist? Why are firms the same/different? What causes changes in organizations? Why do some firms survive and others

don’t? Emerging issue?

Knowledge Previous approaches

Too deterministic Totalizing logic of explanation

More micro-level than previous approaches

Less rationalist/functionalist/positivist Organizing as a temporary patterning of

interactions and alliances Shifting networks of power Always prone to internal decay and

dissolution

Knowledge Organizations are

Preserves of specialist/expert groups Localized knowledge stores Means for sharing and acting on knowledge

Knowledge is key cognitive and representational resource

for the application of a set of techniques from which disciplinary regimes can be constructed

A strategic resource to be produced, codified, stored, and used to generate power

Knowledge Theoretical approaches drawing on knowledge

Ethnomethodology Postmodernist approaches to org culture and

symbolism Neo-rationalist decision making theory Actor-network theory Post-structuralist/modernist theory

A Key Shortcoming Perhaps too localized – what happened to

external environment?

Big OT questions: Why do organizations exist? Why are firms the same/different? What causes changes in organizations? Why do some firms survive and others

don’t? Emerging issue?

Justice Bring field back to the macro level Attention to global issues Discussion of governance and control and

“fairness” Several theories using justice approach

Neo-institutionalism Political economy of organization Organizational democracy and participation

in governance

Justice Neo-institutionalism

More than just an aggregation of individual actions

Looks at rules that bind organizations Emphasis on entities that penetrate organizations

state, social class, professions, industry Central concern:

“cultural and political processes through which actors and their interests/values are institutionally constructed and mobilized in support of certain organizing logics rather than others.” (Structure)

Justice Neo-institutionalism (cont’d)

Secondary concern “complex overlapping organizational discourses

in which institutionalization is practically grounded and precariously realized” (agency)

Attempted to reconnect Local with the global Organizational practices/policies with

institutional rationalities and structures Negotiated order with strategic power and

control

Big OT questions: Why do organizations exist? Why are firms the same/different? What causes changes in organizations? Why do some firms survive and others

don’t? Emerging issue?

Network Has a major influence on the literature

Multiple definitions/approaches taken Has explained many changes in OECD

countries Has been applied to many settings (see p.

35) Talk more to system-wide changes than

specific phenomena The big picture

emergence, development and impact of discontinuous or disjunctive change

Network Three major research approaches

Macro Wide-ranging and broadly focused studies - theory of network-

based organizations and societies as a whole Mid-range

Uses network-based theories to understand dynamics and outcomes of change within and between specific institutional fields/sectors

Attempts to explain new, different organizational forms Micro

Identify, map and describe the highly complex networking activities and relations that lie beneath the surface level of institutionalized orders and regimes

Workplace restructuring

Network Can be seen as a lever of control / power Shortcomings

Very different from older OT literature Are they irreconcilable?

Organizations have resisted the logical change in organizational form Highly centralized Distant from local needs Unable to change rapidly

Big OT questions: Why do organizations exist? Why are firms the same/different? What causes changes in organizations? Why do some firms survive and others

don’t? Emerging issue?

The intersection A highly contested domain

Advocates from each approach Thus “Revolutionary” period

Ontology/Epistemology How is reality defined?

Positivism? Socially constructed? Critical Realism?

Fundamental assumptions in approaches

The intersection Agency/Structure

How are creation and constraint related through social activity?

How do creation and constraint coexist? Agency – Humans create and reproduce

institutions Structure – Institutions constrain human

actions

The intersection Local/Global

At what level should organizational analysis/theorizing take place?

Is there one “right” level? Individualism/Collectivism

Is all organizational action/behavior just a sum of it’s individual parts?

Can organizations “act”?

Where do we go from here? Two options from the beginning

Retreat to orthodoxy Embrace diversity and discontinuity

Or both?