Notes + flashcards Foundations of Business Administration (E_MB_FBA) Organization Theory & Design, ISBN: 9781473765900
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Foundations of Business Administration (E_MB_FBA)
Institution
Vrije Universiteit Amsterdam (VU)
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Organization Theory & Design
Detailed notes from the course Foundation of business administration of the minor Business Administration at Vrije Universiteit.
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- Notes from chapters: 1,2,3,4,5,6,7,10,14
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New summary 2024 - Organization Theory & Design - An International Perspective - 4th edition Richard L. Daft - Chapters 1,2,3,4,7,8,9,10,11, 12
Summary entire book Richard L. Daft, Organization Theory & Design
Summary - Introduction to Organization Studies
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WEEK 1
CHAPTER 1 - WHAT ARE ORGANIZATIONS?
Organization theory concerns issues like companies’ failure to respond or control competitors, customers or difficulties
in implementing strategic and structural changes, or coping with large size and bureaucracy.
→ it extends beyond the managerial perspective to ask more fundamental questions about how and why organizations
are designed the way they are, who creates and authorizes the design, and who may explore an alternative one.
→ organizing involves continuous challenges in the face of uncertainty and change. No organization is protected from
changes in technologies, customers preferences, availability of supply…
→ political economy: a theoretical framework that focuses on 2 key components of organizations and their interaction:
- The polity: the political system of the organization, is the constitution of fundamental norms, the system of
authority, power, and influence.
- The economy: the system processing and transforming raw materials into goods and services that the
organization produces.
Current challenges
- Globalization: markets, technologies, and organizations are becoming increasingly interconnected. It is now
more feasible to locate different parts of an organization elsewhere. A trend is to contract out some functions to
organizations in other countries or to partner with foreign organizations. Companies large and small are
searching for the structures and processes that can help them reap the advantages of global interdependence
and minimize the disadvantages.
- Ethics and social responsibility: issues of ethics and social responsibility are becoming increasingly important.
The list of executives and major corporations involved in financial and ethical scandals casts a shadow over
corporate life. Ordinary citizens quickly form the opinion that all executives are crooks. Therefore, leaders are
under pressure to hold their organizations and employees to higher standards of ethics and competency
- Responsiveness: to environmental changes, organizational crises, and shifting customer expectations.
Reflecting the importance of customization and branding, the financial basis of today’s economy is information,
not machines and factories. Intangible assets, including corporations’ investments in people, become
increasingly important compared to tangible assets.
- The digital workplace: more and more companies are switching to digital processes rather than in a physical
space. The trend towards disintermediation - eliminating the middleman often by consuming the unpaid time
of the consumer- is affecting every industry. Increasingly, companies share information across the organization,
making decision making to be made with less reference to organizational hierarchy.
- Diversity: managing diversity may be one of the most rewarding challenges for organizations competing on a
global basis.
Organization = social entities that are goal-directed, are directed deliberately structured and coordinated activity
systems and are linked to the external environment. They are made of people and their relationships with one another.
- Social entities: organizations are cultural and political as well as economic phenomena. Organizations comprise
people who interpret their situation and are capable of ignoring or resisting collectively and individually.
- Goal-directed: activity is highly instrumental rather than intrinsically meaningful. There is a single,
consensually agreed goal.
- Designed as deliberately structured and coordinated activity systems: the division and coordination of labor are
deliberately structured.
- Linked to the external environment: organizations exists within wider context or set of conditions
Why have organizations become so important?
1. Bringing together resources to achieve desired goals and outcomes
2. Producing goods and services
, 3. Facilitating innovation
4. Harnessing modern manufacturing, service and info technologies
5. Adapting to and influencing a changing environment
6. Creating value
7. Accommodating ongoing challenges
CHAPTER 2 - PERSPECTIVES ON ORGANIZATIONS
How we approach and work in organizations will depend upon how we make sense of them. Managers and employees
acquire and apply different ways of making sense of organizations.
From closed to open systems
Closed systems = focuses exclusively upon the organization. In this perspective, organizations are conceived as
self-contained, effectively sealed off from the outside world.
Open systems = this perception pays attention to the open boundary between the organization and the context.
Developing a design that effectively manages the exchanges across this boundary is key to survival and prosperity
Inputs: employees, raw materials, other
physical resources, information, financial
resources.
Outputs: specific products and services for
customers and clients. But also employee
satisfaction, pollution…
Boundary subsystems: enable exchanges
with the external environment: purchasing
supplies or mkt products…
Five basic parts of an organization: Mintzberg
All organizations have unique elements, so grouping
organizations together requires compromises to be made.
Configuration = complex clustering of elements that are
internally cohesive and where the presence of some elements
suggests the reliable occurrence of others.
5 basic parts to any organization:
1. Operating core - employees, who perform the basic work related to the production of products and services
2. Strategic apex - top-level managers, who have overall responsibility for the organization.
3. Middle line - managers who connect the operating core to the strategic apex
4. Technostructure - analysts who have the responsibility for developing the programs, procedures, and rules
which standardize the work of the organization
5. Support staff - people who fill the staff units that provide indirect support services for the organization.
Dimensions of organization design
Organizational dimensions can be categorized in 2 types that interact with
each other:
- Structural: provide labels to distinguish some key, internal
characteristics of an organization, such as degree of formalization.
, - Contextual dimensions: characterize both the organization as a whole, including its size, technology etc… and
the broader organizational setting.
Structural dimensions:
1. Formalization = written documentation in the organization. Procedures, job descriptions, regulations and policy
manuals
2. Specialization = degree to which an organizational task is subdivided into separate jobs
3. Hierarchy of authority = who reports to whom and the span of control for each manager
4. Centralization = when decision-making is kept at the top level, the organization is centralized. When decisions
are delegated to lower organizational levels, it is decentralized
5. Professionalism = level of formal education and training of employees
6. Personnel ratios = deployment of people to various functions and departments
Contextual dimensions:
1. Size = number of employees
2. Organizational technology =how the organization actually produces the products and services
3. The environment = elements outside the boundary of the organization
4. Organization’s goals and strategy = purpose and competitive techniques that set it apart from other organizations
5. Culture = underlying set of key values, beliefs, understandings and norms shared by employees.
Performance and effectiveness outcomes
In principle, managers are hired to adjust structural and contextual dimensions and organizational subsystems to most
efficiently and effectively transform inputs into outputs and provide value.
Efficiency = amount of resources used to achieve the organization’s goals
Effectiveness = degree to which an organization achieves its goals
Other performance measures are also important: impact on corporations upon the natural environment, their
contribution to improving the quality of life nationally and internationally and the legitimacy that they enjoy among the
general public.
Whatever the objective, it is relevant to
take care in working out how it is going to
be achieved, A clear, consensually
determined objective with clear, focused
goals and appropriate strategies for the
attainment are elements of successful
design. Managers are faced with
competing demands when setting goals
and striving for effectiveness. The idea of
balancing the preferences of different
groups have been characterized as a
stakeholder approach.
Major stakeholder groups and what they expect
The evolution of organization theory and design
Organization theory is a way of thinking about and informing action within organizations. Different theories of
organization provide alternative ways to represent and analyze organizations.
, The classical perspective → sought to apply rational calculations to turn organizations into efficient, well-oiled
machines.
Taylor’s principles of scientific management postulate that decisions about organizations and job design should be
based on a precise, scientific study of individual situations to determine which method of doing a job delivers the
greatest output.
Administrative principles considered the design and functioning of the organization as a whole. They contributed to the
development of bureaucratic organizations.
One problem with classical perspectives concerns its limited attention to the social context and to human feelings.
Contemporary
organization design: many
challenges prompt
questioning of the
adequacy of forms of
classical thinking. In
contemporary thinking,
managers are endeavoring
to design and orchestrate
new responses that are
less mechanical and more
organic in the formulation.
Newtonian science
suggests that the world
functions as a
well-behaved machine. But
the science of chaos theory suggests that relationships in complex systems, including organizations, are nonlinear made
up of numerous interconnections and divergent choices. → in order to make quick decisions, many organizations are
being redesigned to become: learning organizations - where communication and collaboration is actively promoted so
that everyone is engaged in identifying problems and enables the organization to continuously experiment, with little
hierarchy, and a culture that encourages adaptability and participation.
→ the essential value is problem-solving
Hutch& Cunliffe CHAPTER 1: WHY STUDY ORGANIZATION THEORY?
Theory= the sphere of abstract knowledge. It’s a set of concepts whose proposed relationships offer explanation,
understanding, or appreciation of a phenomenon of interest.
Concepts provide mental categories into which you can sort, and store ideas in memory. They are formed by abstraction:
a process that involves mentally separating an idea about something from particular instances of it.
Abstraction also allows you to pack large quantities of knowledge into a single concept and to process what you already
know efficiently.
Chunking: allows you to manipulate large blocks of knowledge distilled by abstraction into concepts. It permits you to
relate immense bodies of knowledge to each other and manipulate them to generate new knowledge.
Generalizability = when concepts upon which a theory is built are defined at the highest level of abstraction. The main
benefit is that the more general the theory, the more cases to which it can be applied. But also, the more general the
theory, the less obvious its application will be.
---> abstract concepts give you the ability to think rapidly, and efficiently but you lose the rich detail that those
instances contain.
Theoretical perspective = evolve from similarities in the way phenomena are defined, theorized and studied. There are
3 that have come to dominate organization theory:
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