In this module you will learn


This course is about the theory of organizations.

Organizations are

  1. social entities that are
  2. goal-directed,
  3. deliberately structured and coordinated activity systems
  4. and are linked to the external environment but with an  identifiable boundary
Organizations pervade the lives of people in modern industrial societies.

Q - Think of two examples of organizations: one an "ordinary" organization; the other an exotic, implausible, or "whacko" organization.

The organization is an open system.  It is a set of interrelated elements that transform inputs into outputs.
(A closed system is one that does not depend on its environment.  But an open system is one that must interact with the environment to survive.)

Q - An open system has all the energy it needs within itself.  (TRUE/FALSE?)

The 5 organizational subsystems are:

  1. boundary spanning
  2. production
  3. maintenance
  4. adaptation
  5. management
The view of organizations as open systems is very important because it guides our understanding of organizations.
Within the natural world, human organizations can be viewed as the most complex kind of systems. Q - What are the 5 essential functions of organization subsystems?

Q - The surgery department in a hospital would belong to which subsystem?

Q - Jane Goodall heads the Admissions Office of a large state university.  To what subsystem does she belong?


Organizations can be described along contextual and structural dimensions Here is a short description of contextual and structural dimensions:
Comparison of Contextual & Structural Dimensions
Viewed as "causes" of the structural dimensions, as "independent variables" Viewed as "consequences" or "effects" or "dependent variables"
1.  Size (measured as # of employees, total sales, total assets) 1.  Formalization (use of written documentation such as procedures & job descriptions)
2.  Technology (tools, techniques, actions used to transform inputs into outputs) 2.  Specialization (degree of subdivision of tasks into separate jobs; aka division of labor)
3.  Environmen (all elements outside the boundary of the organization) 3.  Hierarchy of authority (depicted by vertical lines in organization chart; described by number of levels and span of control; see exhibit below)
4.  Goals & Strategy 4.  Centralization (extent to which decisions are made at the top of the hierarchy rather than delegated to lower levels)
5.  Culture (values, beliefs, norms shared by employees) 5.  Professionalism (level of formal education & training of employees; ex: average years of education of employees)
6.  Personnel ratios (% of different types of personnel; ex: administrative ratio, clerical ratio, etc.)

Q - Which dimension refers to the number of activities or subsystems within the organization?

Q - UPS has written job descriptions, specific listed procedures for each task activity, and a thick book full of regulations for its employees and managers.  UPS would thus be rated high on which structural dimension?

Q - Which of the following is a structural (S) and which is a contextual (C) dimension?

Organizations differ with respect to these contextual and structural dimensions and can be described in terms of them.
Much of organization theory deals with causal relationships among these dimensions (treated as variables).
EX: environment stability -> greater formalization (where "->" stands for "causes")
Thinking in terms of dimensions provides insights that are not immediately obvious.
EX: research has shown that
decentralization -> greater formalization
(even though many people would intuitively associate decentralization with a "losening" of formalization!)  Why do you think that is?
Q - "It is important to identify the contextual dimensions of an organization because these dimensions can often be viewed as causes affecting the structural dimensions."  (TRUE/FALSE?)

Q - In the statement, "a large organizational size results in greater standardization", the independent variable is _____ and the dependent variable is _____ ?

Q - In analyzing an organization the environment and technology are usually considered (DEPENDENT/INDEPENDENT?) variables.


1.  The Comparative Approach

The comparative approach is inherent in the focus on organizational dimensions (aka variables) Minicase:  W. L. Gore & Associates  (Daft pp. 20-21).   Compares the profiles of 3 organizations (Gore, Walmart, and a welfare agency) in terms of several organizational dimensions.

Today organizational researchers use the comparative approach with large samples of organizations.  EX: the National Organizations Study surveyed over 650 organizations (next exhibit).

2.  The Contingency Approach

In the history of organization theory, the so-called school of administrative principles (represented by Henri Fayol) believed there were universal principles of management, applicable to any organizational setting.
In contrast, the contingency approach postulates that there is not one best way to organize in all circumstances.  What works (or does not work) depends on the total situation of the organization.  For organizations to be effective their structure must "fit" (be "adapted to") environmental and contextual conditions.

The contingency approach was a reaction against excessive dogmatism of the scientific management and especially the administrative principles approach which assumed that there are universal principles of management that are best in all situations.  The contingency approach was in part the result of findings in the 1960s by sociologist Joan Woodward, who found that the same structure (ex: a given span of control) was not always optimal for the organization.

Q - "A comparison of W. L. Gore Associates with Walmart illustrates the idea that all successful organizations tend to adopt similar structures."  (TRUE/FALSE, and why?)

Q - "The contingency approach says that optimal organization depends upon the total situation."  (TRUE/FALSE?)

Q - Lester White, a management consultant, sucessfully implemented an ABL program on his first consulting job.  He now recommends ABL to all his clients.  In so doing, is he following the principles of contingency theory?  (YES/NO, and why?)

3.  The Modern-Mechanistic and Postmodern-Organic Organization Paradigms

The following oppositions overlap to a large extent and are thus largely equivalent The following representations are substantively equivalent: In recent years there has been a trend away from the modern-mechanistic-mechanical system paradigm toward the postmodern-organic-natural system paradigm of organization.

Q - What's a paradigm?

Q - Greta Birkenbaum heads a public relations firm and uses an organic control model.  Assuming that this structure is appropriate, which of the following characteristics are likely to apply to the organization: nonroutine technology (Y/N), large size (Y/N), frequent face-to-face communication (Y/N), conflict (Y/N), stable environment (Y/N)?


"Organization theory is the sociology of organizations, while organizational behavior is the psychology of organizations."  (Daft p. 28)
Organizational behavior focuses on individuals within organizations; organization theory focuses on the group, the organization, and the community (or set) of organizations.

Last modified 23 Aug 2001