Intro to Organizational Science Mid Term

Who Makes up the Top Management Team?

- The CEO, the COO, and The Exuecitve Vice President -They are al corporate managers whose responsibilies is to set the stratagey for the corporation as a whole.

Social Construction Theory 1966

-Shared symbolism, not structure, creates and maintains social reality -Changing organizations requires one to change the construction and the symbols

What is Vertical Differentiation?

- Refers to the way an organization designs it hierarchy of authority and creates reporting relationship to link authority between levels to give the organization more control over its activities and increases it ability to create value.

Who creates Organizations?

- Sometimes an individual or a few people believe they possess the necessary skills and knowledge and set up an organization to produce goods and services

Who is the CEO?

- The CEO is the person ultimately responsible for setting organizational stagey and policy. The board of directors gives the CEO the power to set the organizations strategy and use its resources to create value

What is a Hierarchy?

- A classification of people based on their relative rank and authority is called a

What is the Contingency Approach?

- A management approach which the design of an organizations structure is tailored to the sources of uncerntaitnty facing a nation. -The structure is designed to respond to various constancy conteniicnesies, things or changes that might happen and therefore must be planned for.

What is Complex Organizations Differentiation?

- Both the division of labor and differntiaon are high.

Institutional Theory

- Organizations within industries or fields develop very similar forms -External environmental factors affect how orgs are perceived, structured, and constructed -Environment is a culture that provides guidance on what orgs should look like • Organizations develop, change so that they look more similar to each other than not in a particular field o Stronger environmental factors, more isomorphic (similar, single style) orgs will appear • 2-3 orgs which are big at top and a bunch of little ones fill in the rest

Outsourcing

- The process of moving a value creating activity that was performed inside an organization to outside where it is done by another company.

Written Rules

- Written rules and standard operating proceudres and unwritten values and norms are important forms of behavior control in organizations. -They specify how employess are to perform their organizational roles, and they set forth the taks and responsibilities associated with each role

What is Corporate Social Responsiibility?

- a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders -Driven By stakeholder interests -CSR as an investment -CSR as a profit Center

What is a Function?

- a subunit composed of a group of people, working together, who possess similar skills or use the same kind of knowledge, tools, or tecniqeus to perform their jobs.

What are Norms?

- are standards of behavior that are considred typical or representative of a certain group of people and which also regulates and govern their beahvipr. -Members of the group follow a norm beacuase it is generally agreed upon standard for behvair. -Having established a group norm, employees actively enforce it by physically and emotionally punishing vioaltors. -External rules need to become internalized norms -The process by which organizational members learn the norms of an organization and internalsize these unwritten rules of conduct.

Rules

- formal written statements that speciy the appropriate means for reaching desired goals. - A high level of formalization implies centralization of authority.

What is a Division?

- is a subunit that constists of a collection of functions or departments that share responsibility for producting a particular good oservice.

What is Forecasting?

- planning for future, what is gonna change/be different

What is Horizontal Differentiation?

- refers to the way that an organization groups organizational tasks into roles and roles into subunits. - establishes the division of labor that enables people in an organziaiton to become more specialized and productive and increases its ability to create value. -Differntaiton is supposed to enable people to specialize and thus become more productive, however sometimes subunits cease to communicate between the different units, and that leads to Subunit Oreintation or a tendency to view ones role in the organization strictly form the persoepctive of the time grame, gaols,a nd interpersonal orientation of ones subunit.

What did the Studies by Larench and Lorsch and Burns and Stalker Indicate?

- that organizations should adapt their structure to reflect the degree of uncertainty in their environment. -Companies with mechanistic structure tend to fare best in a stable environment, while those with organic structure tend to fare best in an unstable ever changing environment

What is Formalization?

- the extent to which the organization follows strict procedures and guidelines -a. de jure - rules written down (employee handbook, union contract, etc.) b. de facto - "known" to members (culture, norms, etc.)

What is a Indeterminancy

- the future is not determined

Impacts of WWII, Globalization, Outsourcing, Competition, and Viet Nam

-Airplanes -Army Testing - Put people in right jobs, spent a lot of time and money -Baby boom until the mid 1960's -Civil Rights act in 1964: Created Title 7 specifies that employed can't make decisions that are group based....gender...race...origin...religon...age...etc -Outsourcing products and services usual effect

What is an Environment?

-An Entity outside the boundry of the organization, providing inputs, absorbing output, and influencing the throughput of the organization

What is Organizational Evolution Theory?

-An advanced open systems model that looks at emergence of orgs, not just their existence, the processes by which change occurs, and the reasons for it

McGregor 1957

-Builds on Maslow's theory...theory x and theory y o Theory x = scientific management org....Technical side o Theory y = humanistic, motivational POV....Social side • Categorize org as one or the other • Theory Z = Ouchi...Combo of theory's x and y, integrated teamwork orgs, think Japanese orgs

What is Decentralized Authority?

-By contrast when the authority to make decisisons about organizational resources and to inititate neew projects is delegated to managers at all levels in the hierarchy, authority is highly decentralized -The advantage of decentralization is that it promotes flexibility and responsiveness by allowing lower-level managers to make on the spot. Managers remain responsible for their actions but have the oppututinity to assume greater responsibilities and take potentially successful risks -The ideal situation is a balance between centralization and decentralization of authority so that middle and lower managers who are at the scene of the action are allowed to make important decisions and top managers primary responsibloity becomes manamgner stratagey

Lawrence and Lorsch 1967

-Developed Contingency Theory • Some orgs should be X's but look like Y's. • Contingencies/variations on environment that impact the way organizations are structured. • Unique combo of things that cause things to succeed or fail

Population Ecology

-Environmental factors select the org characteristics that best fit the environment • Organizations emerge to fill "niches" • Organizations are selected by environment • Assumption here is passivity • Specify how environment influences org. • Environmental factors choose Adaptive responsive orgs...seeks things that want. ..understands how picks successful orgs • Survival = adapt and luck (right place at right time when someone wants something • Biological Evolution

Symbiotic Interdependencies

-Exists between Organizations and Its suppliers and Disributors

Tom Burns and G.M. Stalker

-Found that organizations need different kinds of structure to control actives when they need to adapt and respond to change in the environment. - Specifically, companies with an organic structure were more effective in unstable environments thatn those with mechanist structures

Burns and Stalker 1961

-Mechanistic and Organic Structures -No one right solution, form or structure

Resource Dependence Theory

-Organizations are dependent on the environment for critical resources - Emphasizes the importance of managing the choices and making decisions to acquire resources - Structures which support acquisition are supported, those that don't are "selected out"

What is General Systems Theory?

-Organizations are systems with mutually interrelated subsystems. Subsystems interact and depend on each other and in turn they system depends on the subsystem -Struggle between control and differentiation - how does an organization grow and differentiate (which requires integration) while also maintaining control over people and systems -systems theory raise idea levels of analysis, or at what level the organizational phenomenon is occurring.

Environmental Contingency Theory

-Organizations should be based on the environmental conditions it faces -Organizations are rational systems designed to exploit resources -Organic v. Mechanistic Strcutures

What is Organic Structure?

-Promote flexibility, so people initiate change and can adapt quickly -They are decentralized so that authority is distributed throughout the hireiarchy, people assume the authority to make decisions as organization decitates, roles are losley defined and people continually develop new job skills to perform the contintung changing tasks.

What is Modernist Theory?

-Results from impact

McDonaldism

-Safe, predictable, controlled delivery of product • Flexibility of product McDonaldization is a term used by sociologist George Ritzer in his book The McDonaldization of Society (1993). He explains that it becomes manifested when a society adopts the characteristics of a fast-food restaurant. McDonaldization is a reconceptualization of rationalization and scientific management. Where Max Weber used the model of the bureaucracy to represent the direction of this changing society, Ritzer sees the fast-food restaurant as having become a more representative contemporary paradigm (Ritzer, 2004:553). The process of McDonaldization can be summarized as the way in which "the principles of the fast-food restaurant are coming to dominate more and more sectors of American society as well as of the rest of the world."[1]

What is Mechanistic Structure?

-Strucutres that are designed to induce people to behave in predicable, accountable ways -Decision making authority is centralized, subordnates are closely supervised, and information flows vertically down a hierarchy. Each person is indiviaually specialized and knows what to do.

Consequence oF Poor Design

-The Consequence is Organizational Decline, Resources become harder and harder to acquire and the whole process of value creation slows down.

What is structure?

-The distributions of people among social positions, along various lines, that influence the role relations among those people

What is the Simplest Integration Technique?

-The hierarchy of authority, which differentiates people by the amount of authority they possess.

Paul Lawrence and Jay Losrch Comprehensive Findings

-They found that when the environment was perceived by each of the three departments as very complex and unstable, the attitudes and orientation of each department diverged significantly. Each department developed its own set of values, perspectives and way of doing things. -They also found that when the environment is perceived as unstable and uncertain, organizations are more effective if they are less formalized, more decentralized, and more reliant on mutual adjustment.

Blau and Scott 1962

-They were the first people that understood that social interactions help people better understand organizations -First official discussion of formal versus informal organizations, theory X v. Theory Y

What is centralized authority?

-When the authority to make important deecisison sis retained by managers at the top of the hierarchy -The advantage of centralization is that it lets top managers coordinate organziaitona ctivities and keep them focoused on its goals -The disadvantage is when managers become overloaded and immersed in operational decision making about day to - day resources issues

What is a struggle?

-challenge to obtain scarce resources

Utilitarian (Models of Ethics)

-greatest good for the greatest number of people o Balancing act...cost/benefit approach o Org Impact: who decides who's good are they serving • Example: Apple outsources hardware to decrease production cost for them

Paul Lawrence and Jay Lorsch

-investigated how companies in different industries Differentiate and integrate their structure to fit the characteristic of the industry environment in which they compete. -They selected the plasitic industry (greatest level of uncertatinty), Food processing indicustiy and the container or can manufacturing industry. -Uncerattinty was highest in plastics becayse of the rapid pace of technological and product change -It was lowest in containers where oragnziation produces a standard array of products that change little from year to year.

What is Standardization?

-is conformity to specific models or examples defined by well established sets of rules and norms that are considered proper in a given situation.

Formalization

-is the use of written rules and proceudres to standardize operations.

What is a subunit?

-people with similar and related roles are grouped into a subunit

What is the Mutual Adjustment?

-the evolving process through which people use their current best judgment of events rather than standardized rules to address problems, guide decisison making, and promote coordination.

What is Centralization?

-the extent to which power and decision-making authority is in the hands of a few or many individuals

What is Organizational Change?

-the process by which organizations move from their present state to some desired future state increases their effectiveness. -The goal of the organizational change is to find new or improved ways of using resources and capabilities to increase an organizations ability to create value, and hence it performance.

What is Integration?

-the process of coordinating various tasks, functions, and divisions so they work together, not at cross purposes.

What is an Ethical Delima?

-• Ethical Dilemma: quandary people experience when decide when or not they should act in a way that benefits someone else, even if it harms others + isn't in own interest. o Choosing lesser of two evils, when moral scruples come into play.

What are Stakeholder?

-• Someone or thing who has an interest or stake in org, what it is and what how it does, can own part of it. o Inducements o Contributions • Why do it? • What's my stake? • Why do I have a stake? • How influence org?

Transaction Costs are High when?

-♣ 1.) Orgs begin to exchange more specific goads + services ♣ 2.) Uncertainty = high ♣ 3.) Number of possible exchange partners falls.

Joint Ventures

-♣ Alliance 2+ orgs, agree to establish/share ownership of business • Formal, legal agreement, spells out mutual rights/responsibilities • Reduces problems of managing complex interorganizational relations

Why do Organizatons have the structure they do>

1. Context - the environment and situation in which the organization is, or has been, operating affects structures 2. Design - choices the organization makes about how to structure itself, a more rational approach to why organizations develop the structures they do 3. Evolution/development - Greiner's model with stages and crises

What is Differentiation?

1. Differentiation -complexity, the number and dispersion of the tasks performed a. Horizontal differentiation - extent to which tasks are performed by specialists b. Vertical differentiation - number of supervisory levels c. Geographical dispersion

What are the kind of organizational designs?

1. Simple - no groups, everyone does everything 2. Functional - groups based on common expertise, experience, or resources 3. Divisional/Multi-divisional 4. Matrix 5. Multi-divisional Matrix/Hybrids 6. Joint Ventures & Strategic Alliances 7. Organizational Networks/Co-Ops 8. Virtual Orgs

What are Evolutionary Process

1. Variation - change from current routines/competencies, change in organizational form 2. Selection - differential elimination of certain kinds of variation 3. Retention - selected variations are preserved, duplicated, reproduced

How Managers protect boundaries?

1.) Buffering - protect the internal organizations from interruption of environmental shocks -• protects org from changes in environment o South West Airlines: known for buffering fuel prices...hedge jet fuel prices. o Manages changes in environment 2.) Boundary Spanning - Environmental monitoring activities • permanent structure/system that connects internal/external o Past students (alumnae) and future students o Environment determines how large university can be!

How must managers deciding how and much integrate and how much differentiation must do 2 things...

1.) Carefully guide the process of differentiatioin so an organization builds the core competnences that give it a competigive advantage 2.) Carefully integrate the organization by choosing appripritate coordinating mechanisms that allow subunits to cooperate and work together to sternghetn its core competences.

A few problems with Stakeholders that Organizations Experience are

1.) Competing Goals - - An organization has many different groups of stakeholders striving to achieve different goals. An organizations choice of goals has political and social implications therefore the competing goals make it hard to determine which to follow. 2.) Allocating Rewards - Managers must decide which inducements or rewards each group of stakeholders should receive. An organization needs to minimally satisfy the expectation of each group.

Process through Which Managers assess and measure how effectively there organizaitons creates (Three Processes)

1.) Control - Means having control over the external environment and having the ability to attract resources and customers 2.) Innovation - Means developing an Organizations skill and capabilities so the organization can discover new products and process. It also means designing and creating new organizational structures and cultures to enhance a company's ability to change, adapt,t and improve 3.) Efficiency - means developing modern production facilities using new information technologies that can produce and distribute a company's products in a timely and cost-effective manner.

What are the 6 other Integration Techniques?

1.) Direct Contact Between People - Managers meet face to face to coordinate activities 2.) Liaison Role - A specific manager is given responsibility for coordinating with managers from other subunits on behalf of his or her subunit. 3.) Task Force - Managers meet in temporary committees to coordinate cross functional activities 4.) Team - Managers meet regularly in permanent committees to coordinate activities 5.) Integrating role A new role is established to coordinate the activities of two or more functions or division 6.) Integrating Departments - A new department is created to coordinate the activities of functions or divisions.

What are the types of managers at the lower level?

1.) Divisional Mangers - Managers who set policy for the division they manage 2.) Funcitonal Manangers - Managers the who are responsible for developing the functional skills and capatbilities that colelctivley provide the core compentiencs that ie the organizations it competitive advantage.

As Organizations Grow they differentiate into five types of functions...they are?

1.) Support Funcitons - functions that facilitate an organziations control of its relations with its enviorment and its stekaholder. ♣ Functions include: purchasing the acquisition o finputs, sales and marketing to handle the disposal of outputs, and Public Rleations to respond to the needs of outside stakeholders. 2.) Production Function - Manage and improve the efficiency of an organization's conversion processs so that more value is creatined ♣ Production function includes production operation, production control, and quality control. 3.) Maintence Function - enables an prgamozatpm tp lee[ its de[artents in operation. ♣ Inclues personel to recruit and train, engineering to repair broken parts ot he organization, and etc - 4.) Adaptive Funcitons - Allows an organization to adjust to change sin the environment. ♣ Includes functions such as R and D 5.) Managerial Functions - facilitates the control and coordination of activiites within and among departments. ♣ Includes acquisition, ivnesmtent in, and control of resources to increase the organizaitons value.

What are the different types of Directors?

1.)Inside Directors - are directors who also hold offices in a company's formal hierarchy, they are full time employees of the cooperation's 2.) Outside directors - are not employees of the company, many are professional directors who hold positions on the board of many companies, or they are executives of other companies who sit on other boards. There goal is to bring objectivity to a company's decision making process and to balance the power of the inside director. - They serve as rubber stamps to the management decisions

What are Organizational Ethics?

Moral principals and Beliefs about what is right or wrong. Impact both individual and organizational level behaviors.

Katz and Kahn 1964

Open Systems Theory- imply to the concept that organizations are strongly influenced by their environment. The environment consists of other organizations that exert various forces of an economic, political, or social nature. -Spelled out all the theories together -Input --> Throughput --> Output... it's a loop! -Not only internal but also external -Get resources inside and outside of org -Outside org = environments -Entropy: things tend towards disorder but can stay ordered with energy...maintenance/investment o Energy needed to maintain order: • Money • Structure/norms • Ideas/creativity • People • Differentiation: different things so peoples demands are met! -Homeostasis: balance of system o Too many products, cut back...too little, ramp up production - Equifinality: Multiple ways to adapt to a new model or to survive o Different ways to be successful -Combinations of these things work and will be beneficial...but if don't work then bad things will happen

What is an Agency Problem?

Problem in determining managerial accountability that arises when delegating authority to managers.

How do Organizations create value for?

Stakeholders

Who has the ultimate resources?

The Shareholder - Legally they own the company and exercise control over it through their representatives on the Board of Directors

What are values?

They are created in three stages ( Each stage is affected by the environment) The stages are input, Conversion-throughput), and Output

What is Organizational design?

_The process by which managers select and manage aspects of structure and culture so an organization can control the activities necessary to achieve its goals. - Organizational Strucutre and Culture are the means the organization uses to achieve its goal, Organizational Design is about how and why various means are choosen.

Long Term Contracts

informal, reduce costs by sharing resources, oral/written, causal/shared/implicit

Keiretsu:

mechanism for achieving benefits of formal linkage mechanism w/o costs

Contacting

pay someone else to do things for them! Moving internal aspect external

What is Organizational Theory?

the study of how organizations function and how they affect and are affected by the environment in which they operate.

Moral Rights (Model of Ethics)

• : maintain fundamental rights of those who are affected, have a duty/responsibility to do so o Preserving rights of some, affects others...trade offs!

What forces affect the specific Enviorment?

• Affect particular org in a particular way How affect? • Customers: how many, who, profiles, etc • Distributers/suppliers: controls what resources are given and where things go. • Competitors: control environment on how competitive it is. • Labor: organized?/unions? Deal with a lot in certain orgs • Government: industry specific rules/guidelines (ex: airlines, universities, coal, etc have certain rules for industry)

What are the issues with organizational effectiveness

• Definition: ill-defined: differences between what people think and organize their company • Varies on model:* connected to definition but cant say for sure that's what effectiveness looks like • Varies on who is asking: based on persons state/interest • Varies on org type: depends on how they are effectiveness...small business vs church vs wallstreet • Conflicts: who decides what is ultimately important

What is Organizational Effectiveness?

• Input to output ratio • Goal attainment • Competitor comparison • Stakeholder satisfaction • Minimizing waste/cost • Cohesion (organization connection and communication) • Quality • Adapting

Types of Stakeholders

• Inside -directly related o Executives: high level leaders, CEO, founder, etc • Contribute?: decision making, skills, vision/direction • Inducement?: $, prestige • Influence org?: leadership, vision, restructure o Managers: can have anywhere from 1 to 8 levels • Contribute?: skills, expertise • Inducement?: money, intrinsic/internal, purpose, promotions • Influence?: implementers o Employees: who does the work • Contribute?: skills, expertise • Inducement?: money, intrinsic, promotion • Influence?: work/not, "work to the rule", quantity, quality, culture, interface, collective bargaining** o Shareholders/Owners: Stockholders, Family, anyone who owns org • Contribute?: money • Inducement?: money, intrinsic, prestige, influence(?) • Influence?: money, influence through connections, lobby • Outside - everyone else with an interest in org o Customers: biggest group and most influential, consumers! • Contribute?: word of mouth, sales • Inducement?: product/service, quality, support , prestige, identity • Influence?: feedback, demand, o Suppliers • Contribute?: Inputs • Inducement?: $, reputation • Influence?: quantity, quality, o Government • Contribute?: regulate, controls/protects • Inducement?: trust/legitimacy, taxes, broader interest in economy, philosophy • Influence?: laws, regulations, taxes o Unions: anyone who organizes and represents interests of employees • Contribution: workers, peace • Inducement: money (for own budget, and resources for members), peace • Influence: strikes, slow downs, "work to rule" (only what required to do), lobbying o Community: any place where org operates/ influences • Contribute: customers, location, infrastructure (roads, parking, electricity), ♣ South: Right to work state = at will aka no contract, work b/c want to, quit when want, get fired anytime...skilled and unskilled workers because no unions ♣ Union States = Michigan, Ohio, PA Illinois, Indiana, etc....only ONE car manufacturing above Mason Dixon line. • Inducement: support (if community does or not) - politically, financially, pride/membership - • Influence: protest (lack of support) o General Public: everyone who is affected by org aka expanded community, broader, bigger • Contribute: location • Inducement: support • Influence: protest

Fordism

• Machine based thinking about orgs • "Just in case"...have everything you need to build, and thousands of them stockpiled...just in case you need another one. • Competitive Labor Management Relations o Labor paid more, management paid less...management paid more, lay off labor, or make cheaper products • Environment change b/c of competition (quality and price) • Change in industry...cooperative labor management relations! -Fordism, a specific stage of economic development in the 20th century. Fordism is a term widely used to describe (1) the system of mass production that was pioneered in the early 20th century by the Ford Motor Company or (2) the typical postwar mode of economic growth and its associated political and social order in advanced capitalism.

What affects the General environment?

• Political • Legal/Regs: ramifications/ rules of company • Culture: traditional, norms, values...shared things b/w people in org • Geography: resources available, space, etc • Technology: cost, research, infrastructure, etc. • Economic: ownership rules, Specific

Toyotaism

• Reflects social/relationship based • "Just in time" ...assembled as needed, parts showing up at same time • Cooperative labor management relationship...own whole thing so if one goes on strike because all go on strike • Flexible and Adaptive...responsive to environments

Justice (Model of Ethics)

• behave that distributes benefits and harms in as fair a way as possible o Try to be fair because some people are going to be harmed...who decides what's fair? Who decides how much harm one group has verse another?

Mary Parker Follet (1926(

• Compliance and following orders o Situational piece influences what do. o Can't depersonalize -Pyschology applied to business -Power of situation/Context

Ethics

• Ethics: inner-guiding moral principles, values + beliefs that people use to analyze or interpret a situation; tells what "right" /appropriate way to behave.

Strategies for managing symbiotic Resource Interdependencies

- - To manage symbiotic interdependencies, organizaitons have a range of startageies from which to choose. - Developing Good Reputation : - Reputation (least Formal) :o org is held in high regard/trusted by other parties. Fair and honest business - Cooptation: manages symbiotic interdependencies. by neutralizing problematic forces in specific enviro ♣ Common to coopt problematic forces such as customers, supplies or other important outside stakeholders is to bring within org and make them inside stakeholders ♣ Outside stakeholders can be brought in through bribery which is illegal, or through Interlocking Directorate: a linkage that results when a director from one company sits on the board of another company

What is a Staff Role?

- A Staff Role is held by managers who are in charge of a specific organizational function such as sales or R and D.

What is an Organization?

- A social collective entity with a recognized boundary, coordinating systems, existing in an embedding environment, and engaging is purposeful, goal-directed activities - simplified: is a tool people use to coordinate their actions to obtain something they desire or value -- that is to achieve their goals. Example: People who value security create organizaitons called police forces

Purpose of Transaction Costs

- A transaction cost approach sheds light on why and how organization choose different linkage mechanisms to manager there independencies.

Max Weber

- Defined a Bureaucracy -Found that there is a difference between personal and Corporate, you need to separate personal and corporate rights - 3 bases of authority 1.) Traditional: Historical how we have done it, legitimacy through tradition 2.) Rational -Legal Authority: Legal based on rules, normative rules 3.) Charismatic Authority: because of influence, likability, or motivates to do something, heroic, individual characteristics based authority.

Bernard 1939

- Emphasized that material rewards don't motivate people - members of orgs instead of employees -Cooperation...common moral purpose. Helps to make orgs successful

Output

- Finished Goods, services, dividends, salaries, value for stakeholders - The result of the conversion process is an output of finished goods and services that the organization releases to its environment, where they are purchased and used by customers to satisfy their needs - such as delivered books

What is the General Enviorment?

- General Environment: forces that shape specific environment + affect ability of all orgs in a particular environment to obtain resources. 1.) Economic: interest rates, economy, unemployment, determine the demand for proudcts and the price of inputs. 2.) Technology: production techniques + info-processing equipment impact org operations. It could increase productivity and can be an investment in advanced research and development activities. 3.) Political/Ethical/Environ: gov policies for orgs + stakeholders, country ethics = culture ♣ Demograpchic, Cultureal, and Social forcues such as the age, education, lifestyle, norms, and values of a nations people shape organziations customers, managers, and employees.

Humanistic Organizational Theory

- Humans possess characteristics that limit control -Historical Impacts, response to major events - Organizations exist to serve human needs, not vice versa -Was about People as social creatures, not just economic or mechanistic ones.

Bureaucratic Costs

- Internal transaction costs that differ from the costs between the organziaiton and the enviorment. : communication, integration, meetings

What is Differentiation?

- Is the process by which an organization allocates people and resources to organizational taks and establishtes the task and authority relationships that allow the organization to achieve its goals. - o It is the process of establishing and controlling the Division of Labor, or degree of specialization in the organization

Philosophical Perspective

- Objectivist: quantifiable, measurable, something exists independently then someone experiences it. Org = quantifiable, measurable, study-able thing (like a chair) - Subjectivist: things only exist as we experience them, interpretable

What is Resource Dependency Theory?

- Organizations depend on their enviorment for the resources they need to survivie and ogrouw. However the supply of resources depends on complexty, dynamism, and richness of the enviorment. - Resource Dependence is Defined as: the goal of an org is to minimize its dependence on other orgs for the supply of scarce resources in its environ + find ways to influence them to make resources available. - In order to Manage Resource Dependency 2 things must happen: 1.) Exert influence over other orgs so it can obtain resources 2.) Must respond to the needs/demands of other orgs in environment

General Early History of Organizations

- Organizations have been around for about 150 years...they are a recent phenomenon -There roots are found in Religious Organizations - Catholic Church is the Oldest - -government (Particularly the Military) -Philosophers -Universities

What is a stakeholder?

- People who have an interest, claim, or stake in an organization, in what does, and in how well it performs.

What is the Board of Directors?

- The board has legal authority to hire, fire, and discipline corporate management. Th chair of the board of directors is the principle representative of the shareholders and as such has the most authority in an organization

Interorganizational Strategies for Managing Resource Dependencies

- To reduce uncertainty, an organization needs to devise interorganizaitonal strategies to manage the resource interedependencies in its specific and general enviorment. Managing these interdepndieicnes allows organizations to protect an enlarge their domain.

What is Scientific Managment

- Using science to break down work into component parts and manage them that keeps them as ordered and hierarchical as is efficient. -Makes people like Objects, if break, throw out and replace

What are Organizational Roles?

- a set of task-related behaviors required of a person by his or her postion in an organization. -The basic building blocks of differentiation

Strategic Alliance

- agreement, 2+ companies share resources, develop joint business op

What is Simple Orginzation Differentiation?

- because the division of labor is low. One person or a few people perform all organiziatonal takss to there are few problems with coordinationg who does what and whn

Networks

- cluster of different orgs, actions clustered by contracts/agreements -Share manufacturing, marketing, R&D skills...can result in alliances

What is Transaction Cost Theory?

- costs of negotiating, monitoring _ governing exchanges b/w people o Whenever there are costs people work together, there are costs, transafctions costs, assocaitied with controlling tehire activiees. ♣ Transaction costs arise when here is the exchange of resources or information.

What is a Transaction Cost?

- costs of negotiating, monitoring _ governing exchanges b/w people oWhenever there are costs people work together, there are costs, transafctions costs, assocaitied with controlling tehire activiees.

What is Uncertainty in an Organizational Enviorment? And What causes uncertainty?

- factors that shape the enviorment can be looked at as a cuase of uncertaintiy because they affect the complexity, dynamism, and richness of the environment. As the forces cause the enviorment to become more complex, lesss stable, and poorer, the level of uncenrtatinty increases. Check Book o Environment dynamism: is a function of how much and how quickly forces in the specific and general environment change over time and thus increase the uncertaintiy an organization faces. ♣ Environments are stable if forces affect the supply of resources in a predictable way. An environment is unstable and dynamic if an organization cannot predict the way in which the forces will change over time. • An organization in a dynamic environment well seek ways to make it more predictable and so lessen the uncertainty it faces. o Environment Richness: is a function of the amount of resources avalibale to support an oragnziations domain. ♣ In rich enviorment, uncertaintiy is low because resources are plentiful and so roganziaitons need not compete for them. ♣ In poor enviorments, uncertaintiy is high because resources are scare and organziaitond so hae to compete for them. • Enviorments may be poor for 2 reasons o 1.) An organization is located in a poor region of a country o 2.) there is a high level of compettiton and organizations are fighting over the availe resources

Subordination of Labor (During the industrial Revolution)

- people who are productive start to separate themselves from those who aren't or can't be productive. People who own resources separate from those who don't. -This reinforces Hierarchy -Skills that have allowed for people do whatever job they want regardless of parts - This led to the development of the factory system.

What is an Organizational Domain?

- range of goods + services that the org produces,+ customers + other stakeholders it serves. o Established by deciding how to manage forces in environment to maximize ability to secure resources...structure transactions to protect/enlarge domain o Protect domain by expanding internationally...new opportunities to create value

What is the Organizational Environment?

- set of pressures and forces surrounding an organization that have the potential to affect the way it operates + its access to scarce resources. -Scare resources include raw materials and skilled empoess an organzationa needs to produce goods and services, the information it needs to improve ite technologu or decide stratagem, and the support of outstide stakholders.

What is Bureaucracy?

- set of structures and authorities that orgs implement to maximize efficiency. -strict rules can make efficiency decrease for particular cases and sometimes people don't fit in certain departments

What is Authority?

- the power to hold people accountable for their actions and to influence directly what they do and how they do it.

What is the Organizational Environment?

- the set of forces and conditions that operate beyond an organizations boundary but affect its ability to acquire and use resources to create value.

What is the Specific Environment?

-: forces from outside stakeholders that directly affect org's ability to secure resources...costumers, competitors, suppliers, distributers, unions, the government o Global supply chain management: coordination of the flow of raw materials, components, semi-finished products around the world. ♣ Organizations must decide how to manage relationships with suppliers and distributors to obtain access to the resources they provide. o As size + scope of domain changes, transactions change as well ♣ Taste of Customers vary from country to country which affects adversisng campaings, and marketing stratagey from country to country ♣ Finally each country has its own system of government that controls the way business is conducted in their country which can affect the way an organziationa receives resources and creates value.

What is Authority?

-A person who can hold another person accountable for his or perfroamcn - And who has the power to make decisions about how to invest and use organizational resources

Who Comes After the CEO inline?

-After the chair and the CEO, comes the chief operating officer or COO whos is the next person in line for CEO or president oThe COO or president reports directly to the CEO and together they share the principal responsibility for management of the business. o The COO's primary responsibility for managmenting and all its business divisions. -At the next level is the Executive Vice President, Who has a responsibility for for overssein and managing a comapnys most significiant line and staff responsibility /

How does an Agency Relation arise?

-Arises whenever one person (the principal) delegates decision making authority or control over resources to another person

Who is the Corporate level management?

-Corporate level management is the inside stakeholder of the group that has the ultimate responsibility for setting company objectives, and for allocating organizational resources to achieve objectives. - They follow the Chain of Command, that is the system of hierarchical reporting, relationship of large corporation. A Hierarchy is a vertical ordering of organizational roles according to their relative authority.

Frederik Taylor

-Engineer and Main proponent of Scientific Management -"Under Scientific Managers, workers look at employers as their best friend in the world" -Shows utopic view of Scientific management -Managers hate because don't have autonomy, responsibility, etc -Theoretically: makes sense, follows views -Practical: didn't lead to max efficiency

Daniel McCallum - 1855

-First call to Scientific Management -Established World Powers -Industrial Revolution - helps and then replaces people doing work - First Scientific Managment came when he utilized the division of labor and split work into work for humans and work for machines -Systemic Performance Assessment - measures what people do and make sure that they are doing what they are supposed to be doing -Hierarchy coordinating all the parts of the job, divides people into classes, and people can now move up and down the Hierarchy as the complete or don't complete jobs.

Types of Linkages

-Formal Linkage: Direct Coordination, Explicit -Informal Linkage= Indirect/Loose Coordination, Implicit

Socrates - 5th Century BC

-Found that Leadership and Management skills are transferrable -Compares General vs. House Management -Found that the duties between the two are very similar -Found that a set of capabilities that possess that can transfer between jobs -Identification of Generic management Capabilities

Input

-Include resources such as raw materials, machinery, information and knowledge, human resources, and money and capital. ♣ The way an organization chooses and obtains from its environment the inputs It needs to produce goods and services determines how much value the organization creates at the input stage

What is a moral Hazard Problem

-Occurs when 2 conditions exisit? 1.) Principal can't evaluate how well the agent performed because agent has information advantage 2.) Agent has an incentive to pursue goal/objectives that are different from the principal -Self-dealing: managers who take advantage of the position by acting to future self-interest\

Adam Smith -1776

-Pin manufacturin article in relation to agriculture -One person who makes pins can make less pins than 10 people how make all different parts of the pins - Jobs can easily be broken down into easy pieces, which leads to increase skills and time savings -Specialization of Labor can lead to more production

What is Organizational Structures?

-The formal system of task and authority relationships that control how people coordinate their actions and use resources to achieve organizational goals. -Once people have established an organization to accomplish collective goals, organizational structure evolves to increase the effectiveness of the organizations' control of the activities necessary to achieve its goals. - The purpose is to control the way people coordinate their actions to achieve organizational goals, and to control the means used to motivate people to achieve these goals.

What motivates Stakeholders?

-They are motivated when there inducements exceed the value of the contribution they are required to make. -Inducements include rewards such as money, power, and organizational status, while Contributions include skills, knowledge, and expertise that organizations require of their members during task performance.

What is Organizational Culture?

-When Organizational Structures evolve, so does Organizational Culture, which is the set of shared values and norms that controls organizatioanl members interactions with each other and with suppliers, customers, and other people outside the organization.

Franchising

-business sells company's products in certain area. The franchiser seellls the rights to use its resources in return for a flatt fee or share in the profits. Normally, the franchiser provides the inputs used by the francehisee, who deals directly with the customer. (city vs. highway stops)

Minority Ownership

-formal alliance, orgs buy minority stake Keiretsu: Group, work together to further groups interests

What is the Line Role?

-held by manaeers who direct responsibility for the production of goods and services.

What are the Sources of Transaction Costs?

-o 1.) Environ Uncertainty + bounded rationality: The enviorment is highly uncertain thus there is a greater diffuclty managning people o Opportunism + Small Numbers: When an organization is dependent on one supplier or on a small number of trading partners, the potential for opportunism is high because of the small number of suppliers. o Risk + Specific Assets: too risky = An organization that sees any prospect of being trapped or blackmailed will judge the investment in specific assets to be to risky. The transaction caost assocatied with the investment will become to high, and value that could have been created is lost. ♣ Specific Assets: investments (skills, machinery, knowledge + info) create value in 1 particular exchange but have no value in any other exchange

Reason why Organizational Design are important? (Four Reasons)

1.) Dealing With Contingencies - A contingency is an event that might occur and must be planned for such as changing environment pressure like rising gas prices or the emergence of a new computer like amazon -The design determines how effectively an organization can respond to various pressure in its environment and so obtain scare resources 2.) Gaining Competitive Advantage - Increasingly, organizations are discovering that organizational design, change, and redesign are a source of sustained Competitive Advantage - the ability of one company to outperform another because its managers can create more value from the resources at their disposal - Competitive Advantage Springs from Core Competencies managers skills and abilities in the value-creating activities such as manufacturing R & D, new tech, 3.) Managing Diversity - Differences in the race, gender, and national origin of organizational members have important implications for the values of an organization's culture and for organizational effectiveness. - An organization needs to design a s structure and control system to make optimal use of the talents of a diverse workforce and to develop an organizational culture that encourages employees to work together. 4.) To Promote Efficency, Speed, and Innovation - The way an organizations structure links people in different specialization, determines how fast the organization can introduce a new product.

There are two main groups of Stakeholders

1.) Inside Stakeholders - People are closest to an organizational do have the strongest or most direct claim on organizational resources: Shareholders, managers, and the workforce. ♣ Shareholders- Shareholders are the owners of the organization and as such their claim on organization resources is often considered superior rot the claims of other inside stakeholders ♣ Managers- Managers are the employees responsible for coordinating organizations resources and ensuring that an organizations goals are met successfully. In effect, managers are the agents or employees of shareholders; they are appointed indirectly by the board of directors that shareholders elect to oversee managers performance. ♣ Workforce- An organizations workforce consists of all no managerial employees. Members of the workforce have task responsibilities and duties (usually outlined in a job description) that they are accountable for performing at the required level. 2.) Outside Stakeholders - people who do not own the organizations and are not employed by it, but they do have some claim on or interest in it. Customers, suppliers, the government, trade unions, local communities, and the general public are the individuals that make up outside stakeholders. ♣ Customers- are usually an organizations largest outside stakeholder group. They are induced to select a particular product from alternative products by their estimation of the value of what they receive from it relative to what they need to pay for it. ♣ Suppliers- contribute to the organization by providing reliable raw materials and component parts that allow the organization to reduce uncertainty in its technical or production operations and thus reduce production cost. They have direct effect on the organizations efficiency and a indirect effect on organizations customers. ♣ The Government - Wants organizations to compete in a fair manner and obey the rules of free competition. It also wants companies to obey agreed on rules and laws concerning the payment and treatment of employees, workers, health and workplace safety, nondiscriminatory hiring practices, and other social and economic issues about which congress has enacted practices. ♣ Trade Unions- The relationship between a trade union and an organization can be one of conflict or cooperation. The nature of the relationship as a direct effect on the productivity and effigies of the organization and the union. Traditionally, however, the managers-union relationship has been antagonistic because unions demands for increased benefits conflict directly with shareholders demands for greater company profits and thus greater returns on their investment. ♣ Local Communities- They have stake because employment, housing, and the general economic well-being of a community are strongly affected nu the success and failure of local business. ♣ General Public - The public is happy when organizations compete effectively against overseas rival. A nations public prefers loyalty to US business as a way to ensure the future health of the country. They also want their corporations to act in a socially responsible way which means refraining from taking any actions that may infuse or impose costs on the stakeholders.

Different Types of Goals

1.) Official Goals - Are guiding principles that the organization formally states in its annual report and in other public documents. - Usually these goals are laid out in the mission of the company. Goals that explain why the organization exists and what it should be doing. - Official goals are meant to legitimize the organization and its activities, to allow it to obtain resources and the support of its stakeholders 2.) Operative Goals - are specific long and short-term goals that guide managers and employees as they perform the work of the organization. - Can gauge efficiency by setting operative goals that allow you to set benchmarks to see your quality compared to your competition

How to Evaluate the Effectiveness of an Organization (3 ways)

1.) Secure scarce and valued skills and resources from outside the organization (External Resource approach) - Allows managers to evaluate how effective an organization manages and controls its external environment - To manage control over the environment, managers use indicators such as stock prices, profitability, and return on investment, which compares the performance of their organization compared to other organizations 2.) coordinate resources with employee skills creatively to innovate products and adapt to changing customer needs (internal systems approach) -Allows managers to evaluate how effectively an organization functions and operates. - To be effective, an organization needs a structure and a culture that fosters adaptability and quick response to changing conditions in the environment. -Measurement of an organizations capacity for innovation include the length of time needed to make decisions, the amount of time needed to get new products to the market, and the amount of time spent coordinating the activities of different apartments. - 3.) Convert skills and resources efficiently into finished goods and services (technical approach) - Allows managers to evaluate how efficiently an organization can convert some fixed amount of organizational skills and resources into finished goods and services. -Technical effectiveness is measured in terms of productively and efficiency (the ratio of inputs to outputs)

Karl Marx -1860

1.) Subordination of Labor - Doesnt see the benefits 2.) Alientation -Results in lack of pride in what they do -Reward is money not the work 3.) Resistance Workers must resist the subordination -Resulted in unions

What is the CEO responsible for?

1.) The CEO is responsible for setting the organizations goals and designing its structure ♣ The CEO allocates authority and task responsibilities so all employees are coordinated and motivated towards a goal 2.) The CEO Selects key executives to occupy the topmost levels of the managerial hierarchy ♣ The decisions of which managers to promote the top of the organizational hierarchy is a vital part of the CEO's job because the quality of decisions making is directly affected by the abilities of an organizations top managers 3.) The CEO Determines top managers rewards and incentives ♣ The CEO influences the motivation of the top managers to pursue organization goals. 4.) The CEO Controls the allocation of scarce resources such as money and decision making power among the organizations functional areas or business divisions. ♣ This control give the CEO enormous power to influence the direction of the organizations future value creation actives - the kinds of products the company will make, the markets in which it will compete, and so on. 5.) The CEO's actions and reputation have a major impact on inside and outside stakeholders views of the organization and affect he organizations ability to attract resources from its environment. ♣A CEO's personality and charisma can influence an organizations ability to obtain money from banks and shareholders and influence customers desire to by a company's products.

Why Do Organizations Exists? (5 reasons)

1.) To Increase Specialization and the Division of Labor o People who work in organizations may become more productive and efficient at what they do than people who work alone o The collective nature of organizations allows individuals to focus one a narrow area of expedites, which allows more skilled or specialized at what they do ♣ IE an engineer at Toyota can focus one job compared to an engineer at small firm in which they do many things 2.) To use Large Scale technology o Organizations are able to take advantage of the economies of scale and scope that result from the use of modern automated and computerized technology, ♣ Economies of scale are cost savings that result when goods and services are produced in large volumes one automated production lines ♣Economies of scope are cost savings that result when an organization is able to use underutilized resources more effusively because they can be shared across several different products or tasks 3.) To Manage the ORganizational Enviornment o Pressures from the organizational environment in which they operate also make organizations the favored mode of transforming inputs into outputs. o The environment is the place where resources are input from and where they are output. They also are a source of economic, social, and political pressure. Managing these environments is a task beyond the abilities of most individuals, but an organization has the resources to develop specialists to anticipate or attempt to influence the many pressures from the environment 4.) To Economize on Transaction Costs o Transaction Costs are the costs associated with negotiating, monitoring, and governing the exchanges between people o Organizations ability to control the exchanges between people reduces the transaction costs associated with these exchanges. 5.) To Exert Power and Control o Organizations can exert great pressure one individuals to conform to task and production requirement sin order to increase production efficiency. o Organizations can discipline or fire workers who fail to conform and can reward good performance with promotion and increased rewards. Because employment, promotion, and increased rewards are important and often scare, organizations can use them to exert power over individuals.

Fritz Rothlisberger (1941)

Did the Hawthorne studies -The Hawthorne effect (also referred to as the observer effect[1]) is a type of reactivity in which individuals modify an aspect of their behavior in response to their awareness of being observed. -People liked being paid attention to, they can't just mecanize people they need motivation and they need an organizational Culture

Abraham Maslow

Hierarchy of Needs

Why do Ethics Develop?

o Helps orgs play to society's collective interest in a nonthreatening way o Protect people by enforcing fair completion. Reduces transition costs b/w people o Reputation Effect results from good ethical behavior...in org + in society. o Good ethical behavior results in a good feeling.

Conversion - Throughput

o Machinery, Computers, Human skills and abilities - The way the organization uses human resources and technology to transform inputs into outputs determines how much value is created at the conversion stage.

Laws and Ethics

o Neither laws nor ethics are fixed. Differ between people, companies, countries, etc. o Ethical belief leads to laws + regs.

Why does Unethical Behavior Occur? (3 reasons)

o Personal Ethics: influence what do, from education, upbringing, family interests. o Self-interest: take personal interests over orgs at times. o Outside Pressure: pressure from other people/org managers who influence to be unethical

Sources of Organiztional Ethics (Three Sources)

o Societal: important, in society's legal system, customs, practices, unwritten norms/values ♣ Particular to each country, county, city, etc. o Professional: moral rules + values that group uses to control the way they perform tasks or use resources. ♣ Ex: lawyers, researchers, accountants. o Individual: personal moral standards used by individuals to structure their interactions with people. Help make decisions, decides how act in org.

How do you create an Ethical Culture?

o Strong values, rules, + norms define ethical stance. o Top behavior strongly effects this....top down effect

Ethics and Stakeholders

o Top managers have to balance org's actions w stakeholders needs. Weigh rights of groups, what pleases stakeholders, helps org

Using Transaction Cost Theory to Choose Inter organizational Strategy

o Transaction cost theory can help managers choose an interogonazational strategy by enabling them to weigh the savings in transaction costs achieved from using aparticular linkage mechanism against hrt ebruactuct costs of operating the linakage mechanism. To choose the stratagey necessary managers must take these steps... ♣ 1.) Locate sources of transaction coast, affect exchange relationship, decide how high costs are likely to be. ♣ 2.) Estimate trans cost savings from using diff linkage mechanisms ♣ 3.) Estimate bureaucratic costs of operating linkage mechanism ♣ 4.) Choose linkage mechanism that gives most cost savings at lowest bureaucratic cost

Durkheim - Late 1800

• Formal organizations o Division of labor, rules, hierarchies, etc structure org • Informal organizations o Environment, procedures, org culture, norms, values structure org o People will always be people even if you want them to work like machines (like in past/formal approach) • In I/O psych, I = formal side (smith, McCallum, etc) and O = Marx, Durkheim

Attitudes towards Organizations

• People have casual attitudes toward organizations because organizations are intangible. o Even though everyone is in some way is a part of an organization, nobody has ever seen or touched an organization.

Competitive Interdependencies

• among orgs that compete for scarce inputs and outputs o Control through various linkage mechanisms through coordination of linked orgs. o Org aims to choose interorganizational strategy that offers the most reduction in uncertainty for the least loss of control**

Transaction Cost are Low when...

♣ 1.) Orgs are exchanging nonspecific goods + services ♣ 2.) Uncertainty = low ♣ 3,) Many possible exchange partners

Merger and Takeover

♣ Merger + Takeover: most formal, symbiotic resource interde. Is merge with supplier/distributor. Resource exchange occurs IN the org.

How to solve the Agency Problem?

♣ Stock-based compensation schemes: monetary rewards in form of stocks/stock options that are linked to company's performance. • Increases stake in company's long term performance ♣ Promotion tournaments/career paths: allows managers to rise to top of orgs • Links good performance to promotion.

What is Entrepreneurship?

♣ the term used to describe the process by which people recognize opportunities to satisfy needs and then gather and use resources to meet those needs.