1. MSc in EFM – Management Week 1
Introduction to Organisation Theory

2. What is an organisation?
“A tool used by people to coordinate their actions to obtain something they want or value”
“Organisations are: (1) social entities that (2) are goal directed, (3) are designed as deliberate structured and coordinated activity systems, (4) are linked to the external environment”
“An organisation is an interplay of technology, social structure, culture and physical structure embedded in and contributing to the environment”

3. What is organisation theory?
“ ‘Theory’ is an attempt to explain a segment of experience in the world”
Theory attempts to explain ‘the phenomenon of interest’
Organisation theory attempts to explain organisations
What they are like, how they work (or don’t)
How they are structured, and why
Relationships between different parts
How they change etc, etc

4. Behind theory! Theory is based on assumptions
Different assumptions will lead to different theories
Assumptions are not always made explicit
A set of related assumptions and theories often termed ‘a paradigm’ – a ‘mindset’; a way of thinking
Burrell and Morgan developed 4 paradigms found within Organisation theory, based on 2 sets of assumptions

5. 1. Assumptions about the nature of social science
‘Ontology’ – The nature of being, what is reality?
Epistemology – The theory of knowledge; how we know something; validity of knowledge
Methodology – Ways of investigating or finding knowledge
Human Nature – what are humans like, how do they react, behave

6. Subjective - Objective Dimension
ontology
Realism
Nominalism
epistemology
Positivism
Anti-positivism
methodology
Ideographic
Nomothetic
human nature
Determinism
Voluntarism

7. Ontology Ontology ontology
Realism
Nominalism
Realism – the world is ‘concrete’ and separate from an individual’s perception. The social world has ‘objective reality’, it is ‘out there’.
Nominalism – does not accept a ‘real’ structure to the world. The world only exists in the mind and perceptions of an individual. It is ‘in the mind’, not ‘out there’

8. Epistemology epistemology
Anti-positivism
Positivism
Positivism “seeks to explain and predict what happens in the social world by searching for regularities and causal relationships between its constituent elements
‘Verficationists’ and ‘falsificationists’
Anti-positivism assumes the world is essentially relativistic and can only be understood by those directly involved. Rejects the concept of ‘objective observer’

9. Methodology methodology Ideographic Nomothetic
Nomothetic methods emphasise systematic techniques, testing hypotheses, ‘scientific rigour’, quantitative data, statistics, etc.
Ideographic methods assume only first-hand knowledge will give true knowledge. Thus need to be close to the subject of study, alongside, ‘getting inside the situation’

10. Human Nature human nature Voluntarism Determinism
Determinism assumes humans are moulded almost completely by their genes and the environment in which exist and have existed
Voluntarism assumes that humans are basically free agents who have free-will and can make choices that overcome the influence of the environment

11. Summary by Morgan and Smircich
See table in Handout
Not a dichotomy between subjective and objective
Continuum with many possible positions

12. 2. Assumptions about Society
‘Regulation’ v ‘Radical Change’
Regulation assumption is “primarily designed to provide explanations of society which emphasise its underlying unity and coherence”
Radical Change assumption views society as having at its heart, “radical change, deep-seated structural conflict, modes of domination and structural contradictions”

13. Regulation v Radical Change
Regulation assumption concerned with:
Radical Change assumption concerned with:
a. The status quo
a. Radical Change
b. Social order
b. Structural conflict
c. Consensus
c. Modes of domination
d. Social integration & cohesion
d. Contradiction
e. Solidarity
e. Emancipation
f. Need satisfaction
f. Deprivation
g. Actuality
Potentiality

14. Four paradigms of Burrell and Morgan
Radical change
Radical Humanist
Radical structuralist
Objective
subjective
Interpretive
Functionalist
Regulation

15. Radical Humanist paradigm
Views humans as being alienated from their true selves, by imposed ideologies
Theories stress ideas such as releasing humans, critiques of the status quo, human consciousness, individuality, choice.
Radical ‘green’ theories
‘Anti-organisation theory’
Theories of craft production, non-urban life-styles, integrating humans with nature
Technology is a negative force in society

16. Radical Structuralist paradigm
Theories relating to structural change and power relations
Usually begins with a critique of Functionalist theory!
Frequently based on a thorough understanding of Weber and Marx
Concept of ‘class’ is very important
Often Action Research – theory and practice are developed together

17. Interpretive paradigm
The world is an emergent social process which is created by the individuals concerned
Two schools of thought have been dominant
Phenomenology
‘The phenomenon is that which immediately manifests itself in consciousness’
Rejects objective or detached viewpoint
Investigates the meanings of events in the consciousness of those involved
Organisations do not exist as tangible entities

18. Ethnomethodology
Theory based around a methodology
Grounded in the detailed study of everyday life
Particular interest in ‘taken for granted’ assumptions which characterise social relations
Organisations seen as common-sense constructs; hierarchy is challenged

19. Functionalist paradigm
Objective and regulation are key assumptions
Does not challenge the status quo – seeks to explain
Change is not radical but evolutionary
By far the dominant paradigm in economics, and organisation theory
Next section is brief overview of the development of functionalist theory in 20th century

20. Classical Management theory
Developed as ‘Scientific Management’ by Frederick Taylor in early 1900s
Engineering view of Organisations.
People were adjuncts to machines, and could be treated in similar manner
There was always ‘one best way’ to carry out any task
Job broken down into small tasks and rewards and punishments used to ensure each task done well
The task of management was scientific – discovering best method
Very controversial then – even more so later

21. Classical Management Theory - 2
Henri Fayol developed a similar theory independently at about the same time, BUT Fayol dealt with office work not factory tasks
“Theory of Administration” – Henri Fayol
CMT most objective of all organisation theory

22. Industrial Psychology
Developed at same time as CMT, but totally different perspective
Aim was to understand workers and conditions of work, such that management could create a working environment that would maximise performance
Long tradition and still exists in modified form

23. “The Hawthorne Studies”
Critically important series of studies conducted by Harvard researchers in 1930s
Initial objective was to demonstrate the validity of Scientific Management and Ind Psychology approach – emphasis was on physical work conditions and employee performance
Results in opposition to the theories being tested
New hypotheses developed that stressed the importance of social systems in organisations

24. Effect of Hawthorne Studies
With hindsight these studies are open to serious criticism
Detail not important
The ‘great leap forward’ was shift away from highly objectivist theory based on ‘mechanical humans’, towards a theory based on ‘Social humans’
“The impact of these studies on organisation theory can hardly be exaggerated.”

25. Equilibrium Theories These based within economics
Key writers Henry Simon, Cyert & March
Known as ‘behavioural economists
Seminal book was “Administrative Behaviour” by Simon in 1945
Key concepts included:
Human behaviour ‘satisfices’ not optimises
Bounded rationality
‘Administrative Man’, not ‘Economic Man’

26. Structural Functionalists
Philip Selznick – 1948
“although organisations are formally rational, in actual practice they are greatly influenced by the informal and social aspects of organisations”
His theories examined the relationships between:
Formal and informal organisations
Mechanistic and organic management
Individual and organisational goals
Organisational change
Organisations had the following features:
goal-directed;
self-maintaining internally and with respect to the environment;
purposive rationality

27. Open Systems Theory
Mid 1950s Ludwig von Bertalanffy developed General Systems Theory including the more particular ‘Open Systems Theory’
Based on a Biological metaphor GST has been developed in vast range of disciplines
Morgan in ‘Images of Organisation’ states there are three key issue:
Environment
Sub-systems
Improvement to the system

28. OST - Environment
Early OT treated organisation as if separate from its environment
OST defines ‘task environment’ – the direct interactions with environment through customers, competitors, suppliers etc. And ‘contextual environment’ – the more general environment in which organisation operates, such economic, cultural conditions etc.
Environment has been an extremely significant shift in focus and is highly influential

29. OST – Sub-Systems
Model is of system made of subsystems – e.g. a human body is a system but contains: blood system, nerve system, skeleton, muscles etc
Katz & Kahn – 1966 developed this in ‘The Social Psychology of Organisation’ – advocating 5 generic sub-systems:
Production or technical sub-systems
Supportive sub-systems
Maintenance sub-systems
Adaptive sub-systems
Managerial sub-systems
Production – obvious
Supportive – rest of value chain – dealing with suppliers customers etc
Maintenance attracting and holding people in their fuctional roles
Adaptive – org change
Managerial - obvious

30. OST – Improvement to system
Notion of improved organisational effectiveness
Appropriate matching internally of sub-systems, and externally with environment
Major Problem for OST!!
Although a very elegant theory it has proved almost impossible to operationalise and there is little empirical evidence in its support

31. Empirical Studies Began in earnest in 1950s – Some key examples
Joan Woodward – 1958 & 1965
Large study of companies on Essex – detailed data
Showed production technology, organisation structure and business effectiveness were correlated
Aston Studies – 1960s and early 1970s
Multivariate analysis of organisation structure and context
Context included: history, size, ownership, technology, location, control
Particularly showed relation of size and technology on structure

32. Contingency Theory
This is a framework that synthesises the key features of OST with the key results from later empirical research
Seminal work was “Organisation and Environment” by Lawrence and Lorsch, 1967
E.g. “In a more diverse and dynamic industry, such as plastics, effective organisations have to be highly differentiated and highly integrated. In a more stable and less diverse industry, such as containers, effective organisations have to be less differentiated, but they must still achieve a high level of integration.
“There is no one best way” – direct contrast to early theories
The next few lectures expand Contingency Theory

33. Action Frame of Reference
David Silverman, 1970s; border with interpretive
Some key features are:
Concepts from natural sciences are not necessarily appropriate for social sciences
Social sciences concerned with understanding actions not observed behaviours
Meanings are given to people by their society – shared meanings eventually become social facts
While society defines man, man in turn defines society
Through interactions people modify, change and transform social meanings

34. Nature of Theory Good theory has Internal consistency – internal logic
External consistency – empirical investigation
Able to be operationalised
Generalisable
Scientific parsimony

35. Nature of Theory -2 Dimensions of theory Deductive v Inductive
Deductive emphasises logic flow from general to specific (from certain relations others can be deduced)
Inductive theory is primarily developed from empirical events
Normative v Positive theory (descriptive v prescriptive