dr. hab. Jerzy Supernat Institute of Administrative Studies University of Wrocław Determinants of organizational structure

Organizational structure is neither random nor accidental: it is a consequence of the simultaneous impact of many determinants (conditions/factors). A search for a single or primary cause of organizational form is doomed to failure. Fundamental determinants:  context (situation in which an organization operates)  design (organizational actions in regard to structure; decisions made in an organization about how the organization is to be structured)

dr. hab. Jerzy Supernat Contextual determinants  internal  organizational size  technology  organizational culture/climate  external  environment  national culture Determinants of organizational structure

Organizational design  strategic choice (designing a structure by the organization itself)  institutional isomorphism (making use of already existing organizational forms) dr. hab. Jerzy Supernat

Determinants of organizational structure Size of an organization  the number of people in an or- ganization  the physical capacity of an or- ganization  organizational inputs and out- puts  financial resources dr. hab. Jerzy Supernat

Determinants of organizational structure Technology Technology involves acting on and/or changing an object („raw material”) from one state to another. The ob- ject can be a living object (a living being: human or otherwise), a sym- bol, or an inanimate object. People are raw materials in people-changing or people- processing organizations. Symbols are raw materials in banks, advertising agencies and some research organi- zations. dr. hab. Jerzy Supernat

Determinants of organizational structure Types of technology (based mainly on research by Joan Woodward, ): project technology jobbing/unit/one-off technology batch technology  small-batch technology  large-batch technology line/mass production technology continuous-process technology J. Woodward, Industrial Organization: Theory and Practice, Oxford University Press 1965: Many of the variations found in the organizational structure of the firms studied did […] appear to be closely linked with differences in manufacturing techniques. Different technologies imposed different kinds of demands on individuals and organizations, and these demands had to be met through an appropriate structure. dr. hab. Jerzy Supernat

Determinants of organizational structure Organizational culture The importance of the organizational culture factor has received varying degrees of attention by organizational scholars and practitioners. It received prominence in 1938 in Chester I. Barnard’s important analysis of the functions of the executive. C.I. Barnard: one of the main functions of the executive is to set the tone for the entire organization. The emphasis returned with a vengeance in the 1980s as organizations sought a culture of „excellence” underlying the importance of the following attributes: 1) a bias for action, 2) close to the customer, 3) autonomy and entrepreneurship, 4) productivity through people, 5) hands-on, value driven, 6) stick to the knitting, 7) simple form, lean staff, 8) simultaneous loose-tight properties. dr. hab. Jerzy Supernat

Kontekstowe uwarunkowania struktury organizacyjnej dr hab. Jerzy Supernat Chester I. Barnard ( )

Determinants of organizational structure Organizational culture – definition Linda Smircich (born 1948): Organizational culture „is a possession – a fairly stable set of taken-for-granted assumptions, shared meanings, and values that form a kind of backdrop for action” Culture can also include strong ideologies, and strong ideologies make an organization conservative, since de- cisions and actions are made within a particular ideologi- cal framework. dr. hab. Jerzy Supernat

Determinants of organizational structure Organizational culture – definition Edgar H. Schein (born 1928): A pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as a correct way to perceive, think and feel in relation to those problems dr. hab. Jerzy Supernat

Determinants of organizational structure Problems related to external adaptation concern views of an organization’s tasks and objectives as well as the means to implement and assess them. A solution has to be found for them so that the organization can function and succeed in its environment. Problems related to internal integration concern the crea- tion of a common language and concepts, defining group limits, the level of authority relationships and interaction, as well as methods of reward and punishment. A solution has to be found for these so that members of the organization can function together in an organized and predictable working community. dr. hab. Jerzy Supernat

Determinants of organizational structure Environment Of primary interest is the social environment of an organiza- tion, but the physical environment (e.g. climate or geography) can also be important, particularly for the organization that utilizes or affects that physical environment. One way of looking at environments is to determine whether they are friendly or hostile. For the most part in a friendly environment organizations will be structurally differentiated. If the environment turns hostile, the organization will tighten up by centralizing and standardizing its operations.

dr. hab. Jerzy Supernat Political-legal Economic Sociocultural Technological Show me a friend in need and I’ll show you a pest. Pest: 1. An annoying person or thing; a nuisance. 2. An injurious plant or animal, especially one harmful to humans. 3. A deadly epidemic disease; a pestilence. E.g. general economic growth, inflation, interest rates, and unemployment. The methods available for converting inputs into products or services. The customs, mores, values, and demographic characteristics of the society. Government regulations. PEST analysis – analysis of a general (indirect) environment of the organization, usually taking into account four dimensions: Determinants of organizational structure

National culture  the national culture is the main factor determin- ing organizational culture – culture bound view  organizational characteristics are based on factors other than the national culture – culture free view Samurai of the Satsuma Clan, circa dr. hab. Jerzy Supernat

Determinants of organizational structure National culture and organizational culture overlap. For some issues (e.g. dealing with authority) national culture is most important, whilst for other issues (such as dealing with innovations) the organizational culture is more important. An analysis of Japanese companies located in the United States by William G. Ouchi and Alfred M. Jaeger, has found the following general differences between Japanese and American firms:

American organization 1.Short-term employment. 2.Individual decision making. 3.Individual responsibility. 4.Rapid evaluation and promotion. 5.Explicit, formalized control. 6.Specialized career path. 1.Lifetime employment. 2.Consensual decision making. 3.Collective responsibility. 4.Slow evaluation and promotion. 5.Implicit, informal control. 6.Nonspecialized career path. Japanese organization The Japanese firms with operations in the US resembled the Japanese model more than the American model which suggests that the country of origin is of critical importance.

William G. Ouchi Alfred M. Jaeger

Determinants of organizational structure Strategic choice Organizations make strategic choices in regard to how they are structured. The importance of strategic decisions concerning an organizational structure emphasized Alfred D. Chandler. According to A.D. Chandler’s famous statement: structure follows strategy.

Projektowe uwarunkowania struktury organizacyjnej dr hab. Jerzy Supernat Alfred D. Chandler ( )

Determinants of organizational structure Strategic choices are made on the basis of bounded rationality. The idea of bounded rationality by Nobel laureate Herbert A. Simon ( ) means that the strategic choices are not necessarily the optimal choices. Nevertheless the concept of equifinality (the presence of several means available to reach a given end/goal) stresses that decisions and decision making are important. Ludwig von Bertalanffy ( ): In any closed system, the final state is unequivocally determined by the initial conditions: e.g. the motion in a planetary system where the positions of the planets at a time t are unequivocally determined by their positions at a time t°. This is not so in open systems. Here, the same final state may be reached from different initial conditions and in different ways. This is what is called equifinality. dr. hab. Jerzy Supernat

Projektowe uwarunkowania struktury organizacyjnej dr hab. Jerzy Supernat Herbert A. Simon

Determinants of organizational structure In concrete example an organization faces the choice between:  outsourcing (outside resource using)  insourcing (inside resource using) dr. hab. Jerzy Supernat

Projektowe uwarunkowania struktury organizacyjnej dr hab. Jerzy Supernat Model T Year 1915

Projektowe uwarunkowania struktury organizacyjnej dr hab. Jerzy Supernat Model T

Projektowe uwarunkowania struktury organizacyjnej dr hab. Jerzy Supernat Henry Ford next to his Model T in 1921.

Determinants of organizational structure Institutional isomorphism Organizations exist in fields of other, similar organizations. Paul J. DiMaggio, Walter W. Powell: […] By organizational field, we mean those organizations that, in the aggregate, constitute a recognized area of in- stitutional life: key suppliers, resource and product consu- mers, regulatory agencies and other organizations that produce similar services and products. The virtue of this unit of analysis is that it directs our attention […] to the totality of relevant actors. According to this perspective organizations are becoming increasingly homogeneous within organizational fields. dr. hab. Jerzy Supernat

Projektowe uwarunkowania struktury organizacyjnej dr hab. Jerzy Supernat Paul J. DiMaggio Walter W. Powell

Determinants of organizational structure Types of institutional isomorphism  coercive isomorphism (there are coercive forces from the environment, such as government regulations and cultural expectations, which impose standardization on organizations)  mimetic isomorphism (organizations mimic or model each other)  normative isomorphism (takes place as the workforce, and especially management, becomes more professional- ized) dr. hab. Jerzy Supernat

Influence of different factors makes that an organizational structure takes different forms and is dynamic. Nevertheless one shouldn’t forget that an organizational structure is for a purpose and that the purpose is to be as effective as possible.

Concluding remark The achievements of an organization are the results of the combined effort of each individual. Vince Lombardi ( ) dr. hab. Jerzy Supernat