Summary
Organization Theory and Design
Pre-Msc 2024-2025
1 (46) Course introduction, Organization theory Ayvazyan Jones: Ch. 1; 3 2 (47) Designing
effective organizational structures Infantes Sanchez Jones: Ch. 4-6; Case study 3 (48) Growing
effective organizational cultures Infantes Sanchez Jones: Ch. 7; 2 4 (49) Developing successful
organizational strategy and innovation Ayvazyan Jones: Ch. 8-9 5 (50) Leveraging (information)
technology for innovation and organizational learning Ayvazyan Jones: Ch. 12-13 Group
assignment Infantes Sanchez, Thurion, Ayvazyan Jones: Ch. 2, 4-9; Case study 6 (51)
Organizational change, transformation and conflict Ayvazyan Jones: Ch. 10-11; 14
Knowledge clips, slides and Book (by Jones)
“Why organize?”
First order rational Second order rational
1. Division of labor 3. Specialization of labor
2. Coordination of tasks 4. Economics of scale and scope
5. Manage interaction environment
6. Exert power and control
A theory is a system of statements targeted at describing, explaining and predicting a real world
phenomenon.
- Explicit
- Formal
- Measurable
- Generalisible
- Falsifiable
Organizational design
- Stakeholders Theory can be used 2 ways: Design
- Environment 1. As a sensitizing advices, using
- Strategy frameworks and make sense of
reality
- Resources
2. Theory as a scaffold, that helps
- Customers explain why you expect
- products something to happen
,Chapter 4
4.1 What is differentiation?
Differentiation refers to the allocation of people and resources to organizational tasks in an
organization
- Division of labor (degree of specialization) can be vertical or horizontal
- Organizational roles and subunits
- Organization: restaurant chain
- Division: restaurant in groningen
- Function: in the kitchen
- Role: as the chef
Principal design challenge for organizations: horizontal and vertical differenttiation
Additional 3 design challenges:
- Differentiation <balancing> integration
Roles (horizontal) Hierarchies (vertical)
- Communication and coordination problems when an organization is heavenly
diffentiatiorlized. People do not communicate with other vertical/horizontal
functions can be a problem
- Integration mechanism (in order of increasing complexity): increasing costs
- Hierarchy of authority
- Direct contact
- Liaison role
- Task force
- Team
- Integrating role
- Integrating department
- Centralization Decentralization:
Authoritative Functional
- Division of power
- Centralization:
- Employees avoiding responsibility > decision-making is slow
- Managers become overload, Little time for short term decisions
- Decentralization:
- all managers making decisions -> difficult planning and coordination, Loss of
control
- Standardization Mutual Adjustment
Formalization Socialization
- rules
- Stadarization: Follow well-established rules and norms, Formalization (rules)
and socialization (norms)
- In the middle: It depends on the position in the hierarchy and complexity and
uncertainty of tasks.
- Mutual adjustment: Own judgment
,Horizontal differentiation: “how does the organization group roles into subunits?”
Vertical differentiation: “what does the hierarchy of authority look like?”
What are the main types of organizational design challenges?
4.2 Organization design challenges and types of organizational structures:
1. Mechanic Structures
- predictable behavior
- Individual specialization with clear tasks
- Simple integrating mechanisms, mainly through hierarchy
- Strong centralization of authority and control
- High level of standardization
2. Organic structures
- Higher flexibility
- Joint specialization with ad hoc coordination
- Complex integration, with special purpose teams
- Strong decentralization as authority and control are delegated
- Strong mutual adjustment
4.3 what is the contingency approach
Contingency approach
“Organizations need to account for forces that shape the markets they want to compete in”
Consequently organizations need to attain ‘fit’ between such market conditions, relevant
stakeholders, and international structures.
- The design of an organization depends on the environment it faces
- Fit with the environment, company had to adapt.
- When environmental uncertainty is high: organic structure!
- When environmental uncertainty is low: mechanistic structure!
- Adapt your internal structure to control the external environment
Chapter 5
5.1 Why and how does vertical differentiation occur?
Factors affecting the shape of the hierarchy
Webers principles of bureaucracy
Challenges value generation, benefits of an hierarchy
- Control Control is divided over different managers
- Integrate task assignment and relations are clear
- Motivate mentoring, and feedback rewards can be provided
Informal organization (culture) Module 3
, Formal organization (structure) Module 2
5.2 Weber's principle of bureaucracy
- Authority hierarchy Their is a clear division of leaders and hierarchy
- Job specialization Well defined tasks
- Formal rules and regulation Rules are stated and are the same
- Career orientation Managers are professionals
- Formal selection Selected on technical qualifications (no nepotism..)
- Impersonality Rules applies uniformly
-
5.3 Size and height limitations: tall vs flat organizations
- Communication problems when the organization is tall: bureaucracy is slow and new
ideas can be hard to implement (inherent conservatism of hierarchies) so innovation
takes a lot of time, motivation problems when ‘lower’ employees do not have any
hierarchy, bureaucratic costs are high when an organization is tall.
5.4 Span of control: wide vs narrow span of control
- Work overload problems, for manager for example. Wide span of control can be normal
for mechanistic organizations. For organic organizations a narrow control is beneficial.
5.5 Design choices in vertical differentiation
1. Width of span of control (horizontal)
a. The average span of control of an organization
b. There are limits in managers’ span of control based on:
i. More complexity of tasks > smaller span of control for better mentoring
ii. More interrelatedness of subordinates’ tasks > smaller span of control for
better overview
2. Length chain of command (vertical)
a. Tall organizations have a large chain of command, and flat organizations have a
small number of (vertical) levels in an hierarchy.
b. There are limits in an hierarchy in an organization:
i. Too much hierarchy can cause Communication problems
ii. There can be motivation problems by having less responsibility
iii. Bureaucratic costs can be higher: managers costs money
So we have to find the sweet spot of hierarchy
- There is the principle of minimum chain of command:
An organization should choose the minimum number of
hierarchical levels consistent with its goals and the environment in
which it operates (so as flat as possible!)
Factors that can influence shape of the hierarchy
- Level of horizontal differentiation: specialization in to subunits, different hierarchies
- Level of (de)centralization: delegate decision making throughout the hierarchy
Organization Theory and Design
Pre-Msc 2024-2025
1 (46) Course introduction, Organization theory Ayvazyan Jones: Ch. 1; 3 2 (47) Designing
effective organizational structures Infantes Sanchez Jones: Ch. 4-6; Case study 3 (48) Growing
effective organizational cultures Infantes Sanchez Jones: Ch. 7; 2 4 (49) Developing successful
organizational strategy and innovation Ayvazyan Jones: Ch. 8-9 5 (50) Leveraging (information)
technology for innovation and organizational learning Ayvazyan Jones: Ch. 12-13 Group
assignment Infantes Sanchez, Thurion, Ayvazyan Jones: Ch. 2, 4-9; Case study 6 (51)
Organizational change, transformation and conflict Ayvazyan Jones: Ch. 10-11; 14
Knowledge clips, slides and Book (by Jones)
“Why organize?”
First order rational Second order rational
1. Division of labor 3. Specialization of labor
2. Coordination of tasks 4. Economics of scale and scope
5. Manage interaction environment
6. Exert power and control
A theory is a system of statements targeted at describing, explaining and predicting a real world
phenomenon.
- Explicit
- Formal
- Measurable
- Generalisible
- Falsifiable
Organizational design
- Stakeholders Theory can be used 2 ways: Design
- Environment 1. As a sensitizing advices, using
- Strategy frameworks and make sense of
reality
- Resources
2. Theory as a scaffold, that helps
- Customers explain why you expect
- products something to happen
,Chapter 4
4.1 What is differentiation?
Differentiation refers to the allocation of people and resources to organizational tasks in an
organization
- Division of labor (degree of specialization) can be vertical or horizontal
- Organizational roles and subunits
- Organization: restaurant chain
- Division: restaurant in groningen
- Function: in the kitchen
- Role: as the chef
Principal design challenge for organizations: horizontal and vertical differenttiation
Additional 3 design challenges:
- Differentiation <balancing> integration
Roles (horizontal) Hierarchies (vertical)
- Communication and coordination problems when an organization is heavenly
diffentiatiorlized. People do not communicate with other vertical/horizontal
functions can be a problem
- Integration mechanism (in order of increasing complexity): increasing costs
- Hierarchy of authority
- Direct contact
- Liaison role
- Task force
- Team
- Integrating role
- Integrating department
- Centralization Decentralization:
Authoritative Functional
- Division of power
- Centralization:
- Employees avoiding responsibility > decision-making is slow
- Managers become overload, Little time for short term decisions
- Decentralization:
- all managers making decisions -> difficult planning and coordination, Loss of
control
- Standardization Mutual Adjustment
Formalization Socialization
- rules
- Stadarization: Follow well-established rules and norms, Formalization (rules)
and socialization (norms)
- In the middle: It depends on the position in the hierarchy and complexity and
uncertainty of tasks.
- Mutual adjustment: Own judgment
,Horizontal differentiation: “how does the organization group roles into subunits?”
Vertical differentiation: “what does the hierarchy of authority look like?”
What are the main types of organizational design challenges?
4.2 Organization design challenges and types of organizational structures:
1. Mechanic Structures
- predictable behavior
- Individual specialization with clear tasks
- Simple integrating mechanisms, mainly through hierarchy
- Strong centralization of authority and control
- High level of standardization
2. Organic structures
- Higher flexibility
- Joint specialization with ad hoc coordination
- Complex integration, with special purpose teams
- Strong decentralization as authority and control are delegated
- Strong mutual adjustment
4.3 what is the contingency approach
Contingency approach
“Organizations need to account for forces that shape the markets they want to compete in”
Consequently organizations need to attain ‘fit’ between such market conditions, relevant
stakeholders, and international structures.
- The design of an organization depends on the environment it faces
- Fit with the environment, company had to adapt.
- When environmental uncertainty is high: organic structure!
- When environmental uncertainty is low: mechanistic structure!
- Adapt your internal structure to control the external environment
Chapter 5
5.1 Why and how does vertical differentiation occur?
Factors affecting the shape of the hierarchy
Webers principles of bureaucracy
Challenges value generation, benefits of an hierarchy
- Control Control is divided over different managers
- Integrate task assignment and relations are clear
- Motivate mentoring, and feedback rewards can be provided
Informal organization (culture) Module 3
, Formal organization (structure) Module 2
5.2 Weber's principle of bureaucracy
- Authority hierarchy Their is a clear division of leaders and hierarchy
- Job specialization Well defined tasks
- Formal rules and regulation Rules are stated and are the same
- Career orientation Managers are professionals
- Formal selection Selected on technical qualifications (no nepotism..)
- Impersonality Rules applies uniformly
-
5.3 Size and height limitations: tall vs flat organizations
- Communication problems when the organization is tall: bureaucracy is slow and new
ideas can be hard to implement (inherent conservatism of hierarchies) so innovation
takes a lot of time, motivation problems when ‘lower’ employees do not have any
hierarchy, bureaucratic costs are high when an organization is tall.
5.4 Span of control: wide vs narrow span of control
- Work overload problems, for manager for example. Wide span of control can be normal
for mechanistic organizations. For organic organizations a narrow control is beneficial.
5.5 Design choices in vertical differentiation
1. Width of span of control (horizontal)
a. The average span of control of an organization
b. There are limits in managers’ span of control based on:
i. More complexity of tasks > smaller span of control for better mentoring
ii. More interrelatedness of subordinates’ tasks > smaller span of control for
better overview
2. Length chain of command (vertical)
a. Tall organizations have a large chain of command, and flat organizations have a
small number of (vertical) levels in an hierarchy.
b. There are limits in an hierarchy in an organization:
i. Too much hierarchy can cause Communication problems
ii. There can be motivation problems by having less responsibility
iii. Bureaucratic costs can be higher: managers costs money
So we have to find the sweet spot of hierarchy
- There is the principle of minimum chain of command:
An organization should choose the minimum number of
hierarchical levels consistent with its goals and the environment in
which it operates (so as flat as possible!)
Factors that can influence shape of the hierarchy
- Level of horizontal differentiation: specialization in to subunits, different hierarchies
- Level of (de)centralization: delegate decision making throughout the hierarchy
