Organization Theory

Structure, Design, and Applications

Third Revised Edition

Stephen P. Robbins and Mary Mathew

C H AP T E R

PART I: INTRODUCTION: WHATS IT ALL ABOUT?

An Overview
PowerPoint Presentation by Rajeesh Viswanathan
Jansons school of Business

After reading this chapter, you should be able to:

Define organization theory
Compare organization theory and organizational
behavior
Explain the value in studying organization theory
Describe the systems perspective
Describe the life-cycle perspective
Discuss how systems and life cycles are part of the
biological metaphor

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What
What is
is an
an Organization
Organization
An organization is a consciously coordinated
social entity, with a relatively identifiable
boundary, that functions on a relatively
continuous basis to achieve a common goal or a
set of goals.

13

What
What is
is Organization
Organization Structure?
Structure?
It defines how task are to be allocated, who
reports to whom and the formal coordination
mechanisms and interaction patterns that will
be followed.
Organization structure has three components:
1. Complexity
2. Formalization
3. Centralization

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Components
Components of
of Organization
Organization Structure
Structure
Complexity: It considers the extent of
differentiation within the organization.
Formalization: The degree to which an
organization relies on rules and procedures to
direct the behavior of the employees is
formalization.
Centralization: It considers where the locus of
decision - making authority lies.

15

Features
Features of
of an
an Organization
Organization

1. It has a relatively identifiable boundary.

2. People in the organization have some
continuing bond.
3. Organization has a goals and to attain it they
set a mission.

16

What
What is
is aa Organization
Organization Design?
Design?

Organization design is concerned with

constructing and changing an organizations
structure to achieve the organizations goals.
It to have a smooth flow of the system without
any ambiguity in functions.

17

Organization
Organization Theory
Theory

It is a discipline that studies the structure and

design of organizations.
It describes how
organizations are actually structured and
offers suggestions on how they can be
constructed to improve their effectiveness. It
studies the organization at a macro level.

18

Contrasting
Contrasting Organization
Organization Theory
Theory and
and
Organization
Organization Behavior
Behavior

Organizational Behavior takes a micro view

emphasizing individuals and small groups.
OB
focuses
organizations,
and attitude

on
the
employees

behavior
in
performance,

Organizational Theory takes a macro

perspective. Its unit of analysis is organization
itself or its primary sub units
OT is concerned not only with the
performance of employee and attitude but
overall organizations ability to adapt &
achieve its goals
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Why
Why Study
Study Organization
Organization Theory?
Theory?

To know how organizations operate from a

scientific point of view and then use the
knowledge for constructing and changing an
organizations structure to achieve the
organizations goals.

110

Ten
TenDifferent
DifferentWays
Waysof
of Glancing
Glancingat
atOrganizations
Organizations
1. Organizations have been conceptualized in
numerous ways
2. Rational entities in pursuit of goals
3. Coalitions of powerful constituencies
4. Open system
5. Meaning producing systems
6. Loosely coupled system
7. Political system
8. Instruments of domination
9. Information processing units
10.Psychic prisons
11.Social contracts
111

The
The Systems
Systems Perspective
Perspective
A systems perspective offers important insights into the
working of an organization.
A system is a set of interrelated and interdependent parts
arranged in a manner that produces a unified whole.
An organization has divisions, departments and like units
separated out to perform specialized activities. At the
same time, in order to maintain unity among the
differentiated parts and form a complete whole, every
energy system has a reciprocal process of integration.
It is achieved through devices such as coordinated levels
of hierarchy; supervision, rules, procedures & policies.

112

Types
Types of
of Systems
Systems
Closed system. It would be the one that
receives no, enclosed, and sealed off from the
outside world. energy from an outside source
and from which no energy is released to its
surroundings. A closed system would not
depend on its environment; it would be
autonomous.
Open System. An open system interacts with and
adapts to the environment by consuming resources
and exporting product and services to it. Because of
its interdependence with various elements issues
involved are more complex in nature.
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An Industrial Organization Open Process

Environment

People
Raw
materials
Information
Financial
resources

Input

Transformation
Process
Transforming of raw material into
Finished products.

Output

Customers

Finished
Products

Government
Financial Institutions - loans

Labor Force - Wages

Suppliers Pay credicators

114

Characteristics
Characteristics of
of an
an Open
Open System
System
All systems have three activitiesinputs,
transformation process and outputs
1. Environment awareness
2. Feedback
3. Cyclical character
4. Negative Entropy
5. Steady state
6. Movement toward growth and expansion
7. Balance of maintenance and adaptive activities
8. Equifinality
115

Importance
Importance of
of the
the Systems
Systems Perspective
Perspective
For managers and future managers, the
systems perspective permits seeing the
organization as a whole with interdependent
parts a system composed of subsystems.
It helps all managers to identify
and
understand the environment in which their
system operates.

116

The
The Life
Life Cycle
Cycle Perspective
Perspective

A life cycle refers to a pattern of predictable

change. By applying it to an organization, we
are saying that their are distinct stages
through which organizations proceed, that the
stages follow a consistent pattern and that the
transitions from one stage to another are
predictable rather than random occurrences.

117

Life
Life Cycle
Cycle Stages
Stages
1. Entrepreneurial stage.
The organization is in
infancy. Goals tend to be ambiguous. Creativity is high.

its

2. Collectivity stage. Organizations mission is clarified.

Communication & structure within the organization remain
informal.
3.

Formalization and control stage. Organization structure is

stabilized with rules and procedures being imposed.
Organization exists beyond the presence of any one individual.

4.

Elaboration of structure stage. It diversifies its products

and services in the market. Decisions are decentralized

5. Decline stage. As a result of competition its products demands

decreases. Management looks for alternatives to sustain and
development of new product.
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Organization Life Cycle

Entrepreneur Stage

Collective
Stage
1 Informal
Communicati
on
2) High
commitment

Formalization
& Control
Stage
1)Rules &
Structures
Formalized

Elaboration of
Structure

1)Complex Structures
2)Decentralisation
3)Market Diversified

Decline
1)Emp turnover
2)Increased
Conflicts

2) Emphasis
on Efficiency

1)Ambiguous goals
2)High Creativity

Ti

119