Organizational THeorizing

Organizational THeorizing MGT 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.

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

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

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?

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

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

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?

Organizational THeorizing