(Environment: Uncertainty MGMT 861 Class 14 (Environment: Uncertainty and Strategic Choice

BURNS & STALKER (1962) Identify 3 systems in every organization: Formal authority Informal/career system Political system Known for MECHANISTIC (bureaucratic, standardization, formalization) and ORGANIC (less hierarchy, open communications, flexible, decentralized) organization typology discussion

BURNS & STALKER (1962) Basic argument is that the form of organization is determined by the nature of the of the environment. The more homogeneous and stable the environment, the more likely the mechanistic (formalized/hierarchical) form will develop. The more diverse and dynamic the environment the more organic (flexible/decentralized) structures will be appropriate. Org can oscillate between mechanistic and organic if it its environment oscillates between stability and change.

BURNS & STALKER (1962) Organic systems are not as hierarchic as mechanistic systems but they are stratified – experience is usually a distinguishing authority characteristic. Commitment is usually greater for organic systems – in such orgs it is harder to distinguish formal and informal organization. Shared beliefs grow within the organic system to monitor organizational action (think of culture) As w/many OT concepts, the two forms again represent a polarity not a dichotomy.

EMERY & TRIST (1965) Build on Burns & Stalker by pointing out that orgs’ environmental contexts change and affect organizations. Identified four causal textures (environments) in which organizations operate: 1. Placid, randomized – relatively unchanging, no distinction between tactics and strategy. Optimal strategy is simple – just do one’s best. 2. Placid, clustered – resources unchanging but location is important, distinctive competence is important. Strategy and knowledge of the environment becomes more important

EMERY & TRIST (1965) 3. Disturbed reactive – strategy is important to obtain resources because there are a number of similar organizations. Competing organizations attempt to hinder each other. 4. Turbulent – must account for all in industry. Lot of complexity and interconnections/interdependencies Commonly held values provide a loose control mechanism. Discuss matrix organizations (in the macro sense). Also consider how the discussion relates to Anderson & Tushman and industry life cycle curves.

LAWRENCE & LORSCH (1967) Contingency Model – study was to understand how organizations effectively deal with their environments Objective was to make a connection between the varying technical and economic conditions outside the organization and the patterns of organization that lead to successful performance. Argue that research at the time was trying to find the best way for orgs to organize. They basically take an open systems approach – environmental conditions determine which systems should be used. (Again - no one best way)

LAWRENCE & LORSCH (1967) Provide good summary of articles related to Contingency Theory toward the end of the reading (Burns & Stalker, Woodward, Fouaker, Udy, Vroom, etc.). As organizations become large, they are broken up and these individual units must be deal with factors outside the firm, but must remain linked. The division of labor among departments lead to a state of differentiation and integration within the organization (managers differ in their orientations)

LAWRENCE & LORSCH (1967) In order to effectively manage large, multi-unit orgs, must deal with the following four issues: Managers orientation toward particular goals Time orientation Interpersonal orientation Formality of structure Studied data from 30-50 interviews conducted at 6 firms in varying industries. Basically found support for their version of Contingency Theory.

CHILD (1972) Looks at role of strategic decision making within the organization’s structure, and explain how organizational structures are selected/affected by three contextual factor constraints: Environmental, Technological, and Size. ENVIRONMENTAL Env. Variability – frequency of change, degree of change difference, degree of irregularity in pattern of change Env. Complexity – heterogeneity and range of activities. Env. Illiberality – degree of threat from competition Point out that decision-makers can alter their environment.

CHILD (1972) TECHNOLOGY Operations Tech – equipping and sequencing work flow Materials Tech – characteristics of physical and informational materials used Decision makers control tasks in relation to resources and therefore structure. SIZE Two arguments – size offers increased specialization, increasing number of people supports decentralization.

CHILD (1972) Size is not deterministic. Decision-makers can restructure into smaller groups and functional activities can be modified by application of techniques or technologies. Org/Env Relationship – Decision makers can somewhat control operation location, clientele served, and types of employees hired. Environmental boundaries defined by relationship to other orgs, constraints imposed upon them. Performance/Env. Relationship – standard of performance required may affect structural variables.

CHILD (1972) Child defines dominant coalition as those who hold most power over a particular period of time. The use of information by coalition will help to determine structure. Technology, environment, and size will all together make an impact on the framework of organizational decision making and hence, the structure of the organization. The decision-making process itself is indeed an important factor in the determination of structure.