What theory refers to the study of the structure functioning and performance of organization?

7.6.3 Horizontal Compatibility

Major organizational theories have implicitly assumed that perfectly rational micro-decisions would automatically produce perfectly rational macro-conditions. This might have been acceptable if a whole range of incompatible performance criteria did not exist, such as a cost center, a revenue center, and an overhead center, producing structural conflicts among peer units in the organization.

Consider, for example, a typical setup within a corporation. The performance criterion for manufacturing units is the minimization of cost of production for a specified output. The performance criterion of the marketing units is to maximize sales revenue. (These units are often referred to as cost centers and revenue centers.) Intuitively, we would expect the interaction between the two centers to be complementary and result in maximum efficiency. Unfortunately, this is not the case. In most organizations the relationship between marketing and production is one of constant friction.

The reason for this is simple: this design violates a basic systemic principle. Suboptimization of each part of an interdependent set of variables in isolation will not lead to optimization of the system as a whole. The two objectives of cost minimization and revenue maximization, taken independently, lead to a basic contradiction within the system. To maximize revenue, sales would prefer to increase the variety of products, add customized features, change delivery schedules on short notice, and so on. Minimization of cost of production, on the other hand, can be achieved more easily by standardizing the production process. This means reducing the number of products and making long-run production schedules. Thus, the basic contradiction emerges: the best answer for marketing comes at the expense of manufacturing, and vice versa.

Ironically, the only reason this setup works at all in today's organizations is that the performance criteria are not taken seriously. (This is the major advantage systems with purposeful parts have over mechanical and organic systems. Such incompatibility could never be tolerated in a mechanical system.)

The usual solution that most corporations adopt for this problem is to compromise. The higher level authority over both centers determines which set of criteria should dominate the other at any particular time. The possible gain in one area might be more than offset by the loss in the other.

A totally different approach to this problem is to aim for compatibility of performance criteria rather than seek a compromise between incompatible sets. One way is to change the performance criteria for marketing and for manufacturing so that they both try to maximize the difference between cost and revenue. This means that both complementary units can be a profit or a performance center where the relationship between marketing and manufacturing is based on exchange, much like that of a customer and a supplier. Both units are now expected to be value-adding operations.

Consider the difference in how the two designs handle flexibility of delivery schedules. Flexibility is a value to some users who are willing to pay a certain premium. For a cost center, this premium has no value whatsoever. The only thing important to the cost center is that a change in production schedules will increase the cost. Since it is not concerned with revenues, the cost center will resist flexibility even when it results in positive net value to the corporation as a whole. Furthermore, since transfer of costs is based on average cost rather than marginal cost, there can be no distinction between users who demand flexibility (or various degrees of it) and those who do not; average cost is the same for both.

A profit center, on the other hand, examines each opportunity on a marginal cost versus marginal revenue basis. The price that the customer is willing to pay for the additional service is balanced against the marginal cost that the supplier will have to incur.

While a cost center is instinctively resistant to any change of operations requested by marketing, a profit center looks forward to opportunities to increase its net contribution to the system.

Note that in a profit-center design it may still be possible for one unit to benefit at the cost of another. But the critical difference is that a win/win situation is now a possibility. Both production and marketing can benefit from meeting customer demands, and, more significantly, the performance criteria are compatible. Note that uniformity of performance criteria, although desirable, is not necessary; the important point is compatibility. In other words, the performance criteria must be designed such that the success of one part does not imply failure of another.

What is organisational theory?

Organisational theory is the name given to a set of propositions that are constructed within the field of organisation science. It includes a study of organisations in practice, and from observation and research develops a body of knowledge that seeks to generalise on the way elements of an organisation interact as well as the way the organisation interacts with its environment.

Organisational theory is the study of the behaviour and nature of organisations and their environments (Miner 2005, p.4). It is not in itself strategic management, economics or a philosophy – though there are elements of all these and more as it relates to the different interactions of groups, individuals, corporate structures and context issues. Most of all it is concerned with the involvement of personal goals within organisations – the relationship between the individual and the group.

One of the more critical aspects of organisational theory is that it makes an attempt both to describe management styles and structures as well as forming generalisations that will help to further inform management. This means that in its character, organisational theory is an applied science – it scientifically investigates and describes organisational behaviours and then makes the resulting knowledge available for problem-solving and decision-making in the ongoing practice of enterprises or institutions.

The conceptualising of organisational theory is not new. In recent decades though it has gone through something of a refining process as terms like organisational behaviour, organisational science, business theory, and many others were debated and, where possible, delineated. The distinctions though, remain blurred. Writing specifically as regards organisational behaviour, Miner notes:

Although the exact boundaries of the discipline are somewhat fuzzy … organisational behaviour’s focus is clearly on the world of organisations. The concern is first with the behaviour and nature of people within organisations, and second with the behaviour and nature of organisations within their environments (Miner 2005, p.3).

Throughout this book, my main concern is to examine both of these issues – behaviour within organisations and the relationship of organisations to their external contexts. Before going further though, there is an issue of terminology. Miner uses the term organisational behaviour. He explains his choice in this way:

Several other terms have become intertwined with organisational behaviour over the years, although none has achieved the same level of acceptance. One is organisational theory, which has come to refer almost exclusively to the study of behaviour and nature of organisations in their environments. A second is organisation(al) science, which appears to cover essentially the same ground as organisational behaviour … However, right now organisational behaviour has won the day (Miner 2005, p.4).

For me the jury is still out as to which term is the most appropriate and current. In this book I will use the term organisational theory to explore both of the issues listed above – behaviour within and connection to context – as regards organisational function and composition.

Though fuzzy around the edges perhaps, organisational theories form a valuable framework for action and policy construction. They enable operators to have a clearer view of the interconnectedness of the different relationships within the organisation. Organisational theory helps to explain how organisations work and how we think about them, and offers advice on how we regulate our relationships within our own organisation, and ideas on more effective ways of contributing to the organisation.

2 Organizational Theory: Origin and Premises

Rational choice theory and organizational theory are brought together by the term rational. However, the term has different meanings (Zey-Ferrell 1981) for RCT and OT. RCT is based on the idea that an individual seeks to maximize his/her utilities as they conduct organization business. The central tenant of rational choice is that individuals at all levels of organizations act selfishly based on their own preferences to maximize their utility. This is rational individual behavior. OT defines rational as the way in which economic organizations are designed—the most efficient method of organizing. This is rational organizational behavior.

Rationality in OT originates in Weber's ([1922] 1968) concept of ‘rational bourgeois capitalism,’ which connotes the systematic organization of ideas, people, and resources in the interests of instrumental efficiency and effectiveness. Weber wrote that rationality and its accompanying bureaucratic organizational form, based on formalization of the rule of law and differentiation of functions, pervaded not only the modern economy, but public administration, the legal system, and religions. The rationalization of bureaucratic structures led to increased efficiency. In Weber's model, organizational rationality and rationalization are essentially the same. This is not a (micro-level) individual process as it is in RCT. It is an organizational process or specification of mean/ends relationships based on systematic calculation and recalculation to achieve the most efficient organizational functioning. Subsequent analyses of organizations have assumed this rationality is the basis of organizations and developed theories around this premise.

7.4.2 CeSMO Network Analysis

Data-driven and computation-driven organizational theories, many of which originated from social network analysis and complex networks, are important in studying the formation, evolution, percolation, and interaction of CeSMO networks. Recent work on finding community structures in networks [23,24] provides a basis for analyzing CeSMO social networks. In addition, the theory of evolving networks [25], which examines the formation and evolution of various different online organizations, and transport and percolation theory [26,27], are also useful in analyzing the information flow in CeSMO groups, which will help reveal how different social movement organizations communicate with each other and how they impact or co-evolve with each other.

4 Defining Paradigms

The term paradigm is derived from the ancient Greek paradeigma and refers to a framework, pattern, or model. Paradigms regularly feature in debates about organization theory. For example, there is a plethora of literature concerned with the idea of organizations moving from one paradigm to another in order to understand and cope better with changes in the business environment.

Although this article is concerned with the application of paradigms to an aspect of the social sciences—specifically organization studies—it is necessary to commence with a discussion of Kuhn's seminal (1970) work on paradigms in relation to the natural sciences. Kuhn was a historian of science. His basic premise was that the role of paradigms in scientific development was as ‘universally recognized scientific achievements that for a time provide model problems and solutions to a community of practitioners’ (Kuhn 1970, p. viii). As such, paradigms determine the development of what Kuhn termed ‘normal science.’ Normal science requires scientists to extend existing knowledge within a known and accepted paradigm. The scientific problems they investigate are perceived as puzzles which are solvable within the pattern of rules and assumptions that exist within the paradigm. If the scientists fail to solve the puzzle, then it is their fault; the fault does not lie within the paradigm itself. Normal science is in contrast to relatively short bursts of ‘revolutionary science’ where the scientist encounters increasingly perplexing anomalies, ‘whose characteristic feature is their stubborn refusal to be assimilated into existing paradigms’ (Kuhn 1970, p. 97). This situation gives rise to a new theory or theories and with it a new paradigm such as occurred with the shift from the Ptolemaic system, where the earth was the fixed center of the universe, to that of Copernicus, with the earth and planets moving about the sun (Kuhn 1970, pp. 116–17). The theory underpinning the new paradigm permits predictions that are incompatible with those of its predecessor. In the process of being assimilated into the thinking of the scientific community, the new paradigm displaces its predecessor.

9.1.1 Connection of CWA with Other Areas

Figure 9.1 is a simplified map of the relation among CWA, cognitive engineering, and ecological interface design (EID). Cognitive engineering draws upon many areas of research, not shown here, such as cognitive science, systems engineering, control engineering, organizational theory, work analysis, and so on. The cognitive engineer's focus is not human interaction with the mediating information and communications technology, but instead human interaction with the complex physical system that lies on the other side of the technology.

CWA draws strongly upon work psychology, ecological psychology, and systems thinking. EID is a set of principles to guide interface design that emerges from the part of CWA that is particularly strongly influenced by ecological psychology.

4 Research on Bureaucracy

Organizational research and research on bureaucracy were once synonymous or nearly so, as the bureaucratic model was believed descriptive of all organizations, for-profit, non-profit, and governmental. Case studies of bureaucracy written during the 1950s and 1960s encompassed government agencies and industrial firms alike as evidenced by titles like Gouldner's (1954) Patterns of Industrial Bureaucracy. Early quantitative research on organizations, such as the work originating at Aston University and the University of Chicago, focused mainly on relations among elements of organizational structure (size, hierarchy, administrative ratio, formalization, centralization, etc.) that flowed from the bureaucratic model implicitly if not explicitly. As attention shifted to external causes of organizational outcomes, however, the bureaucratic model has become less relevant to organizational theory. Thus, for example, the key causal variable in resource dependence models of organizations (Pfeffer and Salancik 1978) is control of strategic resources, which is more germane to businesses than to government bureaus. The key dependent variables in organizational population ecology (Hannan and Freeman 1984) are births and deaths of organizations, which are infrequent in the public sector (see Kaufman 1976). The new institutional theory of organizations has downplayed Weber's notion of bureaucracy as rational administration and has substituted for it the notion that all organizations, bureaucratic and nonbureaucratic alike but especially the former, pursue social approval or legitimation by appearing to be rational rather than actual efficiency outcomes. Almost alone among major organizational theorists, Philip Selznick argues that the problem of bureaucracy remains a central issue in organizational theory: ‘… the ideal of an effective, fair, and responsive bureaucracy remains elusive. Our society desperately needs organized ways of dealing with social problems; we cannot rely solely on market strategies. Yet the specter of bureaucracy still haunts and repels, still saps public confidence and weakens support for collective action’ (Selznick 1996, p. 276).

Several streams of research on bureaucracy remain, although they are at the periphery of organizational theory. One stream of research, largely in the field of public administration, focuses on the possibility of bureaucratic reform, of reducing the otherwise endemic dysfunctions of bureaucracy. This research does not promise solutions; quite the opposite, it finds bureaucratic dysfunctions intractable. For example, reform initiatives almost inevitably create new positions for people to oversee the reform, resulting in new layers of administration and ‘thickening’ of each layer (Light 1997). Decentralizing managerial authority in public bureaucracies is offset by a corresponding centralization of political authority, with little net improvement in efficiency or responsiveness (Maor 1999). Attempts to ‘reinvent government’ by reshaping bureaucracies into so-called performance-based organizations are usually frustrated by conflict over what the performance standards should be (Roberts 1997).

Another stream of research, pursued mainly by economists, focuses on the impact of incentives and performance standards on performance outcomes in bureaucracies. The tentative conclusions of this research are, again, unpromising. Only weak incentives are available in bureaucracies. Not only do bureaucracies perform multiple tasks, but they also answerable to multiple constituencies or, in the argot of agency theory, principals. Multiple tasks weaken incentives in all organizations because the outcomes of some tasks can be more readily observed than the outcomes of others. Multiple constituencies or principals, however, are unique to bureaucracies and further weaken incentives because each constituency will bargain separately with the bureaucracy (Dixit 1996). Specific performance standards built into legislation do discipline the behavior of bureaucrats somewhat, but measures of short-term results can work against long-term objectives and are frequently gamed (Heckman et al. 1997).

6.1.1 Theoretical and Infrastructure Underpinnings

Social computing is a cross-disciplinary research and application field with theoretical underpinnings, including both computational and social sciences (see Figure 6.1). To support social interaction and communication, it relies on: communication; human computer interaction; sociological, psychological, economic, and anthropological theories; and social network analysis [7]. Social informatics studies have revealed that ICT and society influence each other [8]. Thus, social computing has emphasized technology development for society on the one hand and incorporating social theories and practices into ICT development on the other. To facilitate the design of social–technical systems and enhance their performance, social computing must learn from social studies [9] and integrate psychological and organizational theories into computational systems [10]. From an information-processing perspective, the technological infrastructure of social computing encompasses Web, database, multimedia, wireless, agent, and software engineering technologies.

From a methodological viewpoint, incorporating social theories into technology development often poses the additional requirement of constructing artificial societies using agent modeling techniques, according to specific rules and through the interaction of autonomous agents in the environment [11]. Using simulation can be particularly valuable and ethical when examining policies dealing with matters of life and death, such as in bioinformatics, epidemiology [12], and terrorism [13]. In addition, due to the difficulties in testing real systems that are inherently open, dynamic, complex, and unpredictable, computational experiments with artificial systems and simulation techniques are usually needed for evaluating and validating decisions and strategies [14]. Combining real and simulated data for the purposes of verification and validation can be a major challenge, particularly when real-world data are incomplete or unavailable. To seek effective solutions, we can study artificial and real systems in parallel and employ adaptive control methods for these experiments [15]. Finally, social simulations often must be part of a large framework that includes data and text mining tools so that real and virtual data can be collected and co-analyzed [16].

2.2 Dynamics of Religious Organizations

The emerging concern with the organizational dynamics of religion in the 1950s was partly a reflection of the growing salience of ‘organization theory’ in the burgeoning social sciences, and partly a function of Christian theological interests in ‘ministry’ as a modern profession and in churches as complex organizations responding to rapid social change (Harrison 1959, Winter 1968, Beckford 1975). Yet the impact of these analyses of religious organizations on the development of organizational theories in general was modest. This state of affairs began to change slightly in the mid-1970s when notions such as ‘organizational climate’ and ‘organizational culture’ directed attention towards the significance of cultural factors which had always loomed large in analyses of religious organizations but which were emerging as important influences in virtually all kinds of organization. Investigations of communes gave a further impetus to research into the force of strong commitments and normative beliefs among organizational participants. Subsequent discoveries about the importance of rituals, retreats, flexibility, and networking in many organizations have only enhanced the interest that religious organizations now have for some organizational analysts (DiMaggio 1998). This minor rapprochement between the study of formal organizations and the study of religious organizations received a further boost in the 1980s when so-called New Age and quasireligious business began to attract attention for their practice of combining profit seeking with ethical business practices and of contributing towards the ‘spiritual development’ of their staff and clients. And fresh insights into the tensions between the ‘religious’ and ‘agency’ structure of US denominations (Chaves 1993) offer the prospect of explaining comparable tensions between the normative and functional bases for coordination and compliance in other organizations as well.

Two inter-related aspects of religious organizations stand out as the central foci for past and present research: authority and leadership. This does not mean that issues of organizational effectiveness, efficiency, and complexity are irrelevant in the case of religious organizations. It simply means that organizations purveying allegedly timeless truths and the highest normative commitments tend to be relatively more preoccupied than nonreligious organizations with establishing, reproducing, and defending their teachings and practices against corruption, subversion, or apathy.

Other issues for library and information studies research

An examination of the library and information studies literature indicates that there is very little cross-sectoral research in the field. Academics and practitioners tend to confine their research to one library sector, particularly the academic sector. Related to this is a broader issue raised by Biggs (1991), Van House (1991) and Grover and Greer (1991), namely the need for a cross-disciplinary approach to library and information studies research, so that it is placed in a larger context, especially of social science theory. As Van House says, by borrowing approaches from other fields, library and information studies researchers will be encouraged to take a fresh look at problems and generate new solutions (Van House 1991, p. 85). Grover and Greer (1991) mention the following fields, within the family of social and behavioural science, as useful for library and information studies researchers to draw upon: history, anthropology, psychology, sociology, economics, communication, political theory, ethnography and linguistics. For the study of information systems, they list: theory from management, engineering, physics, systems theory, organisational theory, and other applied areas of inquiry (Grover and Greer 1991, p. 106). All of these writers also discuss the importance of the generation of applicable theory. An Australian writer (Maguire 1989, p. 1) regrets the lack of fruitful argument about theory amongst Australian researchers. A contrasting view of interdisciplinary research is presented by Gatten (1989) who sees ‘paradigm restrictions’, or problems arsing from different disciplinary approaches.

Another issue, raised by Lynch (1991), is that of qualitative versus quantitative research in the field. Grover and Greer (1991, p. 107) take up this point, seeing library and information studies research as often having been focused on the technologies of the profession rather than on the clientele. They see a paradigm shift, suited to contemporary society, which recognises a greater complexity of relationships among phenomena and which has provoked a concern for people. These views reflect a landmark paper, focusing on information needs and uses (Dervin and Nilan 1986), which called for an alternative to the all-pervasive quantitative approach to the study of information behaviour. This paradigm shift has resulted in a more frequent focus on ‘the user’. Qualitative research methods are seen as being favoured in this new paradigm. (These issues are discussed in detail in Chapter 2.)

Finally, in the librarianship/information management field, there has been considerable discussion of the topics needing research and in some cases research agendas have been developed. Examples of topics and research agendas are Lynch (1991); Research notes (1988); and Whitlach (1992). Maguire (1989) discusses topics of particular interest to Australian researchers.

A number of the references noted above come from a book by McClure and Hernon (1991) entitled Library and information science research: Perspectives and strategies for improvement which includes a range of chapters discussing the issues of research in relation to professional practice. There are also chapters which are specific to research in public libraries (Durrance 1991); school libraries (Fitzgibbons and Callison 1991); special libraries (Matarazzo 1991); and academic libraries (Townley 1991). Another excellent reference with regard to research in academic libraries is Lynch (1990).