organization theory

Also found in: Financial.

organization theory

  1. the sociological and multidisciplinary analysis of organizational structure and the dynamics of social relationships in organizations. Topics studied comprise: formal and informal structures of control, task allocation, decision-making, management and professionals in organizations, innovation, technology and organizational change. Major contributing disciplines, apart from sociology, include psychology, economics, management science and administrative theory. The psychological emphasis upon individual behaviour is concerned with the study of motivation and reward, leadership and decision-making. This is frequently referred to under the title Organization Theory and Behaviour. Inputs from management science and administrative theory have tended to stress the relationship between organization design and behaviour and the ‘efficiency’ and ‘effectiveness’ of organization arrangements. Organization theory is a subject normally found on the curriculum of most business and management courses.
  2. an alternative term for the specialist area, Sociology of Organizations or Organizational Sociology, its subject content is often indistinguishable from the applied field of organization theory. Nevertheless, the subdiscipline can be identified by the use of perspectives and discussion of issues closer to mainstream academic sociology and derived particularly from Weber's ideal type of bureaucracy. There is also a focus upon all types of organization including nonprofit-seeking ones such as schools, hospitals, prisons and mental institutions in an attempt to arrive at a general theory of organizations (e.g. PARSONS, 1956), develop typologies of organizations and explain similarities and differences in organizational structure. In practice, the boundaries between the multidisciplinary study of organization theory and the sociology of organizations are difficult to discern, since writers in these fields often publish in the same journals (e.g. Administrative Science Quarterly), and many organizational issues (such as managerial strategy, decision-making and innovation) draw upon a multidisciplinary framework. Since the 1970s much sociological writing on organizations has adopted a more critical stance towards managerially defined applied issues and ‘problems’ in organizations, such as worker motivation and ‘efficiency’, in an attempt to re-establish the study of organizations in historical context and in relation to their wider society (for example, studies of the way in which class and gender inequalities are reproduced in organizational contexts e.g. Clegg and Dunkerley, 1970).
Weber's ideal type of bureaucracy provided the point of departure for the postwar development of a sociology of organizations. GOULDNER's (1955a) distinction between ‘punishment-centred’ and ‘representative’ bureaucracy and Burns and Stalker's (1961) comparison of‘mechanistic’ and ‘organic’ forms of organization have been particularly influential for later research. Gouldner demonstrated how bureaucratic rules can be resisted and suggested that bureaucratization can take different forms with varying levels of participation by its members. The contrast between mechanistic and organic organization was used by Burns and Stalker to suggest that different organizational structures are appropriate depending on the degree of stability or uncertainty in the environment. Mechanistic structures are bureaucratic, hierarchical and rigid in contrast to organic structures which are flexible, decentralized and more able to cope with innovation and rapidly changing environments. Comparison between organizations was further elaborated in the attempt to develop general organization typologies based on, for example, the criterion of‘who benefits?’ (BLAU, 1955) and on TYPES OF COMPLIANCE (Etzioni, 1961).

The subsequent development of organization theory reflects both the various theoretical approaches in sociology as a whole and the influence of managerial perspectives, particularly SCIENTIFIC MANAGEMENT and the HUMAN RELATIONS SCHOOL. FUNCTIONALISM has exerted a powerful influence on organizational theory either explicitly, as in the concept of the organization as a system (see SYSTEMS THEORY), or implicitly via assumptions about organizational ‘survival’ and ‘adaptation’ to the environment. Organizations have been conceptualized as ‘open systems‘ with an emphasis on ‘input-output’ exchanges between the organization and its environment. In similar vein, the Tavistock Institute (Trist et al., 1963) has used the concept of‘sociotechnical system’ (see SOCIOTECHNICAL SYSTEMS APPROACH) to describe the interaction between technical production requirements and social system needs and to demonstrate that a variety of forms of work organization are compatible with given types of technology allowing a degree of organizational choice.

CONTINGENCY THEORY (Pugh et al., 1968; Laurence and Lorsch, 1967), which drew on the work of Burns and Stalker, and Woodward's (1970) discussion of the connection between organizational structure and technological complexity in the production process, has synthesized many of these findings, and undermined the claim of Scientific Management that there is ‘one best (organizational) way’. Instead, contingency theory argues for the empirical study of the variety of relations which exist between ‘contextual variables’ (e.g. size, technology, environment), types of organizational structure and performance. Interestingly, however, it has itself come under attack from theorists who, impressed by the success of Japanese managerial methods (Ouchi, 1981), have been anxious to reassert the need for universal principles, such as the importance of strong organizational culture (Peters and Wateman, 1982). In sociology, contingency theory has been heavily criticized for different reasons, namely its deterministic assumptions, empiricism, and the weakness of the correlations established. The neglect of power relations by contingency theorists has been stressed by Child (1985), who proposes a strategic contingency approach to organizations which concentrates upon the role of managerial choice in actively shaping organizational structures in response to contingencies. Contingent factors, such as the environment, are, in turn, not treated as ‘independent variables’ but partly chosen or controlled by powerful organizations (multinationals, for example). The study of power relations and decision-making in organizations has been influenced by Simon's (1957a & b) concept of BOUNDED RATIONALITY and includes the analysis of organizational ‘micro-politics’ (Perrow, 1979).

Interactionist contributions to organization theory have emphasized the socially constructed nature of organizational arrangements as ‘negotiated orders’ and the precariousness of organizational rules (Silverman, 1970) as a corrective to the ‘top-down’ systems view of organizational life. Perspectives derived from SYMBOLIC INTERACTIONISM have informed an expanding area of current research into organizational cultures using ETHNOGRAPHIC methods.

In recent years the realm of organization theory has been transformed by the entry of poststructuralist and ‘culturalist’ approaches – see ORGANIZATIONAL CULTURE.

Full browser ?