London School of Economics and Political Science (LSE)

Modules

33
Organisation Theory

Prerequisite – 10 Introduction to sociology

This paper surveys the ways in which management seeks to shape organisation structure and design in order to achieve efficiency and effectiveness.

The syllabus consists of three inter-related elements. In the first section, the focus is on management as the key actor in the design of organisations. Prescriptive theories of organisations, their range and type, and their critiques are examined. In the second section, the focus is on economic and sociological explanations of organisation structure. In the final section, these theoretical insights are applied to understanding different organisational forms and their competitive significance in an era of global competition and post-Fordism.

Management theories of organisation: These theories are based on the idea that appropriate management practice leads to successful market outcomes. These approaches are prescriptive and universalist in tone (ie they assume that the same management practices are relevant in any society/context) and give primacy to the conscious action of individual managers. The original schools of thought to be examined are Scientific Management (Taylor), Human Relations (Mayo), and Bureaucracy/Administrative Theory (Weber, Faylo).

These ideas have been supplemented by two more recent approaches. Firstly, their universalism has been modified by contingency theory (Woodward, Lawrence and Lorsch, the Aston Group, Mintzberg) which has argued that structures must fit particular circumstances. Secondly, more attention has been paid to the influence of organisational culture and symbolism on how structures work (Pettigrew).

The managerialism of these approaches (ie their assumption that management goals are both unitary and necessarily paramount in any organisational setting) has been attacked by radical and Marxist organisation theorists (Braverman, Clegg and Dunkerley, Salaman, Thompson.

New approaches to organisations and management: In these approaches it is recognised that the construction of particular organisational forms is a complex social and economic process in which the conscious decisions of managers (acting on the basis of prescriptive models) are only a small factor. The syllabus explores this theme under two main headings:

• Economic and ecological approaches to organisations: The key characteristic of these approaches is that the role of the market in determining organisation structure is emphasised. Types of organisational form emerge and decline according to how they fit market conditions. A number of approaches may be examined under this heading:

• Population ecology

• Transaction cost economics

• Principal agent theory and property rights

• Evolutionary economics: path dependency and the impact of technology

• Institutionalist approaches to organisations: these approaches emphasise that organisation structures emerge in particular social contexts. The analyst must understand the institutional preconditions for particular types of organisational structure and design. Two broad approaches are distinguishable:

• Neo-institutionalist theories: these theories examine how and why ideas about the nature of organisations emerge and are spread from one sector or sphere to another.

• Business Systems theory: these theories emphasise the need to examine how national social institutions (the nature of the family, religion, culture, education, financial institutions, the state) create a framework of rules and resources which management draw on, reinforce and change when they structure and design organisations.

Global competition and organisation theory: Global competition has brought different systems of organisation and management into confrontation with each other. Authors have argued that organisations are having to move from one main model (often known as Fordism) to another (post-Fordism). Organisations and national economies which cannot adapt to these world changes will be left behind. Which organisations/national business systems have the capacity to change successfully and why/ The subject will examine this from two perspectives:

• How will national business systems adapt? Examples of Japan, the East Asian NICs, USA, Europe (UK, Germany).

• What are the new institutional preconditions for firm success? Innovation, networks, industrial districts.