Organizational Theory and Design summary 2021
Module 1 : Course overview & theory ..................................................................................................... 2
Module 2 : Organizational structure ........................................................................................................ 4
2.1 Authority and Control .................................................................................................................... 4
2.2 Design levers .................................................................................................................................. 5
2.3 Typology of org. structures ............................................................................................................ 6
Module 3 : Organizational culture ......................................................................................................... 11
3.1 Defining and Diagnosing Culture ................................................................................................. 11
3.2 The power of Organizational Culture and how to leverage it ..................................................... 12
3.3 Shaping Organizational culture .................................................................................................... 12
3.4 Challenges of Organizational Culture........................................................................................... 13
Module 4 : Strategy & Innovation .......................................................................................................... 15
4.1 What is strategy ........................................................................................................................... 15
4.2 Levels of strategy ......................................................................................................................... 16
4.3 Functional level strategy .............................................................................................................. 17
4.4 Business level strategy ................................................................................................................. 17
4.5 Corporate-level strategy .............................................................................................................. 18
4.6 Global level strategy ..................................................................................................................... 20
4.7 Collective value creation through organizations ......................................................................... 21
Module 5 : Technology, Decision Making, Learning and Innovation ..................................................... 21
5.1 Impact of technology on organizing ............................................................................................ 21
5.2 Decision making ........................................................................................................................... 23
5.3 Organizational learning ................................................................................................................ 27
5.4 Innovation and innovation management .................................................................................... 28
Module 6 : Organizational change ......................................................................................................... 31
6.1 Org. change – A planned perspective .......................................................................................... 31
6.2 Org. transformation – A deterministic perspective ..................................................................... 36
Module 7 : Conflict, Power & Politics .................................................................................................... 41
7.1 Conflict & Conflict management .................................................................................................. 41
7.2 Sources of power ......................................................................................................................... 44
7.3 Politics versus Position ................................................................................................................. 46
,Module 1 : Course overview & theory
Jones (2013) chapter 1 and 3.
Goals:
- Course main themes and there underlying relation
- Explain what theory is, including the main building blocks and how it can be used for
organizational design.
Why organize
First-order rationales
1. Division of labour
2. Coordination of tasks
Second-order rationales
3. Specialization of labour
4. Economies of scale and scope
5. Manage interaction with environment
Organizations and the process of organizations
Input -> Organization (of conversion processes) -> Output all within a curtained environment
Organization
- Differentiation vs. Integration
o Roles (horizontal)
o Hierarchies (vertical)
- Centralization vs. Decentralization
o Functional
o Authoritative
- Standardization vs. Mutual Adjustment
o Formalization
o Socialization
Two archetypes of organizations
- Mechanistic
o Individual specialization
o Simple integration, mainly through hierarchy
o Strong centralization
o High standardization
- Organic
o Joint specialization
o Complex integration
o Decentralized
o Mutual adjustment
The role of the environment for organizations (Jones, 2013, p. 134-137)
- Organization needs to fit within the environment, poor fit leads to failure.
Tobias Schiphorst University of Groningen
2 Organizational Theory & Design 2021
, - Contingency approach is management approach in which the design of an organization is
tailored to the sources of uncertainty.
Table 1 Figure 4.10 (Jones, 2013 p.137)
Environmental Uncertainty
Low High
Mechanistic structure Organic structure
Simple structure Complex
Low differentiation High differentiation
Low integration High integration
Centralized Decentralized
Standardization Mutual adjustment
- Low uncertainty -> mechanistic structure
- High uncertainty -> Organic structure
What is a theory?
- Theory is system of statements targeted at describing, explaining, and predicting a real-world
phenomenon.
Figure 1 Theory cycle
- Go from common sense to scientific theory by making the theory:
o Explicit
o Formal
o Measurable
o Generalizable
o Falsifiable
Organizational design Theory
- A sensitizing device to make sense of reality
- As a scaffold that helps why things happen.
- How to combine factors into an organizational structure?
Tobias Schiphorst University of Groningen
3 Organizational Theory & Design 2021
, Module 2 : Organizational structure
Jones (2013) chapter 4 to 6.
Goals:
- Issues around designing effective organizations
- Understand central role of crafting hierarchies
- Understand design variables like differentiation, decentralization, standardization.
2.1 Authority and Control
- Weber’s principles of bureaucracy (think about the army)
o Job specialization -> everything broken down in simple tasks
o Formal rules and regulations -> insure formality (like uniforms)
o Authority hierarchy -> clear chain of command
o Impersonality -> uniform rules to abide by
o Formal selection -> Selected on technical qualifications
o Career orientation -> managers are professionals not owners
Weber’s principles within an organization:
Table 2 Weber's principles pros and cons
Pros Cons
Interactions within organization will be Decision making becomes slow, due the
regulated development of hierarchy
Each person will know his role Members rely too much on rules and standard
procedures, making them unresponsive to
customers
Reducing the cost on employee behaviour
Promotion is a motivational force, due
independent positions.
Inherent conservatism of hierarchies -> the amount of direct customer contact will decrease upon
vertically increasing the hierarchy structure resulting is less direct contact with members lower in
hierarchy.
- More difficult to bring ideas from the bottom to the top
- Less direct customer contact and decision making
Benefits Direct supervision
- Control -> continually assess subordinates
- Integrate -> continuous task-assignment
- Motivate -> professional development
Vertical differentiation -> Creating hierarchy of authority to improve coordination vertically
- Span of control -> Pick optimal number of subordinates to supervise by a single manager
o More complex task? -> smaller span of control
o More interrelatedness of subordinate’s tasks -> smaller span of control
Level of hierarchy -> the number of vertical levels within an organization
Tobias Schiphorst University of Groningen
4 Organizational Theory & Design 2021
Module 1 : Course overview & theory ..................................................................................................... 2
Module 2 : Organizational structure ........................................................................................................ 4
2.1 Authority and Control .................................................................................................................... 4
2.2 Design levers .................................................................................................................................. 5
2.3 Typology of org. structures ............................................................................................................ 6
Module 3 : Organizational culture ......................................................................................................... 11
3.1 Defining and Diagnosing Culture ................................................................................................. 11
3.2 The power of Organizational Culture and how to leverage it ..................................................... 12
3.3 Shaping Organizational culture .................................................................................................... 12
3.4 Challenges of Organizational Culture........................................................................................... 13
Module 4 : Strategy & Innovation .......................................................................................................... 15
4.1 What is strategy ........................................................................................................................... 15
4.2 Levels of strategy ......................................................................................................................... 16
4.3 Functional level strategy .............................................................................................................. 17
4.4 Business level strategy ................................................................................................................. 17
4.5 Corporate-level strategy .............................................................................................................. 18
4.6 Global level strategy ..................................................................................................................... 20
4.7 Collective value creation through organizations ......................................................................... 21
Module 5 : Technology, Decision Making, Learning and Innovation ..................................................... 21
5.1 Impact of technology on organizing ............................................................................................ 21
5.2 Decision making ........................................................................................................................... 23
5.3 Organizational learning ................................................................................................................ 27
5.4 Innovation and innovation management .................................................................................... 28
Module 6 : Organizational change ......................................................................................................... 31
6.1 Org. change – A planned perspective .......................................................................................... 31
6.2 Org. transformation – A deterministic perspective ..................................................................... 36
Module 7 : Conflict, Power & Politics .................................................................................................... 41
7.1 Conflict & Conflict management .................................................................................................. 41
7.2 Sources of power ......................................................................................................................... 44
7.3 Politics versus Position ................................................................................................................. 46
,Module 1 : Course overview & theory
Jones (2013) chapter 1 and 3.
Goals:
- Course main themes and there underlying relation
- Explain what theory is, including the main building blocks and how it can be used for
organizational design.
Why organize
First-order rationales
1. Division of labour
2. Coordination of tasks
Second-order rationales
3. Specialization of labour
4. Economies of scale and scope
5. Manage interaction with environment
Organizations and the process of organizations
Input -> Organization (of conversion processes) -> Output all within a curtained environment
Organization
- Differentiation vs. Integration
o Roles (horizontal)
o Hierarchies (vertical)
- Centralization vs. Decentralization
o Functional
o Authoritative
- Standardization vs. Mutual Adjustment
o Formalization
o Socialization
Two archetypes of organizations
- Mechanistic
o Individual specialization
o Simple integration, mainly through hierarchy
o Strong centralization
o High standardization
- Organic
o Joint specialization
o Complex integration
o Decentralized
o Mutual adjustment
The role of the environment for organizations (Jones, 2013, p. 134-137)
- Organization needs to fit within the environment, poor fit leads to failure.
Tobias Schiphorst University of Groningen
2 Organizational Theory & Design 2021
, - Contingency approach is management approach in which the design of an organization is
tailored to the sources of uncertainty.
Table 1 Figure 4.10 (Jones, 2013 p.137)
Environmental Uncertainty
Low High
Mechanistic structure Organic structure
Simple structure Complex
Low differentiation High differentiation
Low integration High integration
Centralized Decentralized
Standardization Mutual adjustment
- Low uncertainty -> mechanistic structure
- High uncertainty -> Organic structure
What is a theory?
- Theory is system of statements targeted at describing, explaining, and predicting a real-world
phenomenon.
Figure 1 Theory cycle
- Go from common sense to scientific theory by making the theory:
o Explicit
o Formal
o Measurable
o Generalizable
o Falsifiable
Organizational design Theory
- A sensitizing device to make sense of reality
- As a scaffold that helps why things happen.
- How to combine factors into an organizational structure?
Tobias Schiphorst University of Groningen
3 Organizational Theory & Design 2021
, Module 2 : Organizational structure
Jones (2013) chapter 4 to 6.
Goals:
- Issues around designing effective organizations
- Understand central role of crafting hierarchies
- Understand design variables like differentiation, decentralization, standardization.
2.1 Authority and Control
- Weber’s principles of bureaucracy (think about the army)
o Job specialization -> everything broken down in simple tasks
o Formal rules and regulations -> insure formality (like uniforms)
o Authority hierarchy -> clear chain of command
o Impersonality -> uniform rules to abide by
o Formal selection -> Selected on technical qualifications
o Career orientation -> managers are professionals not owners
Weber’s principles within an organization:
Table 2 Weber's principles pros and cons
Pros Cons
Interactions within organization will be Decision making becomes slow, due the
regulated development of hierarchy
Each person will know his role Members rely too much on rules and standard
procedures, making them unresponsive to
customers
Reducing the cost on employee behaviour
Promotion is a motivational force, due
independent positions.
Inherent conservatism of hierarchies -> the amount of direct customer contact will decrease upon
vertically increasing the hierarchy structure resulting is less direct contact with members lower in
hierarchy.
- More difficult to bring ideas from the bottom to the top
- Less direct customer contact and decision making
Benefits Direct supervision
- Control -> continually assess subordinates
- Integrate -> continuous task-assignment
- Motivate -> professional development
Vertical differentiation -> Creating hierarchy of authority to improve coordination vertically
- Span of control -> Pick optimal number of subordinates to supervise by a single manager
o More complex task? -> smaller span of control
o More interrelatedness of subordinate’s tasks -> smaller span of control
Level of hierarchy -> the number of vertical levels within an organization
Tobias Schiphorst University of Groningen
4 Organizational Theory & Design 2021
