W Richard Scott (1981) Organizations: Rational, natural and open systems, Englewood Cliffs, NJ: Prentice Hall: Chapters 1 to 5.
Summarized/Critiqued by Ramya T.V
1 Chapter 1: Subject is organizations
Organizations have a ubiquitous presence in modern industrialized societies and a wide reaching impact on society. According to Parson (1960), the development of organizations is the principal mechanism by which, in a highly differentiated society, it is possible to ‘get things done’, to achieve goals beyond the reach of the individual. Organizations also affect society in terms of influencing the psyche and personalities of its participants, even shaping the products and services they produce (“the medium is the message”), behaving as actors in their own right as ‘corporate persons’ and providing the setting for a wide variety of basic social processes.
Organizations as an area of study, while multidisciplinary, emerged within sociology roughly from the time of Max Weber’s seminal work on bureaucracy was translated to English in 1946-47 and became available to American sociologists. Robert Merton, Max Weber, Philip Selznick, Gouldner, Blau, Frederick Winslow Taylor, Richard Scott (author), Chester Barnard, March and Simon, Likert are some of the significant contributors in this field.
Organizations are studied for their common features and at the same time have important bases of specialization among the various disciplines. Levels of analyses vary; a social psychological perspective looks at individual behaviour within the context of organizations, a structural perspective looks at various subunits or analytical components that comprise the organization and an ecological perspective looks at the organization as a collective actor functioning in a larger system of relations. While early research focused on the social psychological view, Lazarsfeld and Menzel (1961) developed an innovative typology of measures defining the concept of “members” and “collectives”, which ushered in a new wave of studies with the structural perspective. The ecological view emerged in the late 1960s and continues to evolve.
Leavitt (1965) proposes a simple model of an organization, with 4 major elements: social structure, participants, goals and technology, which is adapted to include a fifth element of environment, all of which influence the each other in complex ways. Social structure comprises a normative component with values, norms and role expectations (“what ought to be”) and a behavioural component (“what is”) with activities, interactions and sentiments. When the social structure is explicitly specified in terms of positions and relationships, it is formal, else informal. Participants vary in terms of extent and intensiveness of their involvement, level of expertise/skills and consequently in power and demands for autonomy. Goals, which are conception of desired ends, which again are conditions that participants attempt to effect through their performance of task activities, are both important and controversial in the study of organizations. Technology, viewed as a mechanism for transforming inputs to outputs, can also impact structural features of organizations. Environmental complexity also tends to influence structural features, technology and participant involvement.
Finally, three views of an organization are introduced: rational, natural and open system, which are elucidated in further chapters. As per the rational view, an organization is a collectivity oriented to the pursuit of relatively specific goals and exhibiting a relatively high formalized social structure. The natural system view proposes the view that a collectivity whose participants are little affected by the formal structure or official goals but who share a common interest in the survival of the system and who engage in collective activities, informally structured, to secure this end. An open systems view is that of a coalition of shifting interest groups that develop goals by negotiation; the structure of the coalition, its activities and its outcomes are strongly influenced by environmental factors. In reality, one can see various aspects of all three models in today’s organizations.
2 Chapter 2: Varieties of organizations
Certainly there are a wide variety of organizations and an attempt to classify is towards understanding this complex animal. This chapter briefly reviews a number of typologies which analysts have devised to catalog the diversity of organizations. These typologies are classified according to the major element (as per Leavitt’s adapted 5 element model from chapter 1) identified as the basis for the proposed distinction. Eighteen such typologies are identified. In reviewing typologies, the chapter identifies variables which are viewed as significant by the analyst concerned in accounting for the differences between organizations. Table 2-1 in the chapter provides the mapping between the major element, typology and key variable, and a brief review of each is provided.
While typology based on goals, participants, technology and even environment mostly makes for an unsurprising list, the typology emphasizing social structure makes interesting reading. Max Weber’s model of bureaucracy, underscoring normative structure, makes a brilliant elaboration based on three types of authority- traditional, rational-legal and charismatic. Weber is so confident about his theory that he goes far enough to make a prediction on the stability and future of each of these types. A theory in the field of sociology meeting a Popperian falsifiability criterion is an unprecedented feat, and makes it an outstanding contribution.
The chapter later presents an extremely interesting shift from content to method, to evolve a set of principles for defining good typologies. Blau-Scott and Etzioni’s typologies are examined and used as examples to demonstrate certain principles to construct typologies.
a) Select a dimension or set of dimensions that will help account for important aspects of organizational structures or functions.
b) Define clearly the dimension(s) and specify how they are to be operationalized.
c) When two or more dimensions are utilized, they must be independent in the statistical sense.
Two empirically constructed typologies, one by Haas, Hall and Johnson (1966) and the Aston group employing multivariate analysis of variables are described. While an empirical approach heralded a new wave in the history of organizational theory, it has its limitations given that organizations are too complex and loose in their structural interconnections to yield to an empirical approach. How the organizational context can influence the relation between variables is not specified, and erroneous contextual variables can get picked up for analyses, these are two possible pitfalls.
The chapter ends with an alternative to constructing of typologies, with the emergence of the natural selection approach, where environments differentially select organizations for survival on the basis of the their fit, and goes onto discuss the work of McKelvey (1978) and the definition of the blueprint of an organization. When viewed as open systems, analysts also need to be careful in defining the boundaries of the organization, and also be aware of fundamental changes in the definition of the organization with time.
3 Chapter 3: Organizations as rational systems
“Rational” merely denotes a sense of efficiency in organizing and achieving the goals of the organization. The behaviour of organizations is viewed as actions performed by purposeful and coordinated agents. Rational system theorists stress on “goal specificity” and “formalization” to distinguish organizations from other types of collectivities. Goals could be irrational, conflicting and even vague at the highest level, but as long as operational goals are specific, organizations appear to function smoothly. Formalization has objectives of mechanizing the organization, make roles and relationships appear objective and external to the participants, which in turn has many socio-psychological implications.
This chapter briefly describes Taylor’s scientific management; attempts by Fayol and others to formulate administrative principles, Weber’s theory of bureaucracy and Simon’s discussion of administrative behaviour.
Frederick W. Taylor (1911) and others such as Frank and Lillian Gabreth, Henry Gantt et al insisted that it was possible to scientifically analyze tasks performed by individual workers in order to discover those procedures that maximize efficiencies.
Henry Fayol (1949), Mooney and Railey (1939), Gulick and Urwick (1937) formulated broad administrative principles regarding rationalization, and differed from Taylor in that it was a top-down approach rather than a bottom-up approach. Two types of activities: coordination and specialization were emphasized. The root of many of the modern day practices of unity of command, limited span of control, the exception principle can be traced back to this era! Criteria regarding departmentalization or specialization specified based on homogeneity of purpose, process, clientele and place remain valid to this day, just as the broad concept of line and staff. It is amazing to note that these widely accepted principles of today were greatly attacked at that time, for being mere “truisms” or common-sense pronouncements, having questionable assumptions and have no application guidelines! The learning here is that a theory maybe ahead of its time, and that what sounds ridiculous at a particular time maybe the order of the day at a later time!
Weber’s theory of bureaucracy needs to be viewed in its context of trying to make a distinction from the widely prevailing patrimonial form at that time. Weber provided an alternative practical solution to the ills of the patrimonial system and in that sense it was a brilliant and well studied contribution of that time. Weber emphasized on the type of authority relation that relates superiors to subordinates in the administrative structure. Traditional, rational-legal and charismatic forms are espoused in the proposal. Weber is criticized for confusing authority based on incumbency and technical competence (which may not have been distinguishable in the prevailing times) as well as for not demarcating definitions from proposals, both explicit and implicit. Udy (1959) was the first to suggest that Weber’s model was a starting point for empirical exploration following which a new surge of research got initiated. Weber is recognized as a master of organization theory and his research continues to inform.
Simon and March are responsible for many of the modern day concepts and practices about goals. Goals supply value premises, and are combined in decisions with factual premises. The entire idea of goals cascading down to various levels is completely a contribution from this space. March and Simon are also responsible for the concept of “bounded rationality”. Thompson summarises that “structure is a fundamental vehicle by which organizations achieve bounded rationality”.
The criticism about the rational system theorists is that they completely ignored the huge impact of the environment on the organization. The behavioural structure (actual behaviour) as against the normative structure (expected behaviour) was also left without much attention.
4 Chapter 4: Organizations as natural systems
This model was developed specifically in opposition to the rational system model, and was designed to correct the oversimplified rational model with its naïve conception of individual participants. However it also provides a novel and interesting view of organizations.
Natural system theorists disagree on the relevance of goals and the importance of a formal structure in organizations. Often stated goals are different from the real goals in action, goals are not sacrosanct, and meeting goals is only one of the various needs of the organization serving as a social system. The thrust of the natural systems view is that organizations are fundamentally social groups attempting to adapt and survive in their particular circumstances, having a larger, overriding goal of survival. The structure, a vehicle to achieve the goals, is therefore further questionable, with informal structures being observed in rampancy.
The structural-functional analysis model of analysis underlies natural systems and has been the dominant model from the 1930s to the 1960s. Showing that a given structure meets a functional need constitutes a functional explanation for the structure. Consequences are important, origins are not, and final causes are emphasized over efficient causes. The model also emphasizes that structural elements are mutually interdependent.
Three schools are discussed: Mayo and the HR school, Selznick’s institutional approach and Parson’s social system model.
Mayo (1945) discovered the remarkable (at that time) “Hawthorne effect” that proved that individual workers were not mere mechanical economic actors but were complex beings driven by motives and feelings. This spawned off numerous research and reform offshoots including studies on leadership, workgroup behaviour, employee personality attributes, job redefinition et al which are today flourishing fields.
On a sidenote, as an industry practitioner, it is interesting to note that several decades of research have demonstrated no clear relation between worker satisfaction or supervisory behaviour or leadership style or job enlargement or decision-making participation to productivity!
Philip Selznick’s institutional approach is a coherent work where he explains the non-rational dimensions of an organization as individuals who participate as “wholes” and not merely “roles” and that formal structure is only one aspect of the social structure that must adjust to the institutional environment. Selznick insists that the overriding need of all systems is the maintenance of the integrity and continuity of the system itself. He refers to “institutionalization” as the process through which an organization develops a distinctive character, “cooptation” a mechanism by which external elements are incorporated into the decision making structures of the organization. The institutional model seeks to explain changes in the goals of the organization, adapting to a hostile environment for its survival, although most of the literature focuses on deviant examples.
Parson’s AGIL framework is a schema applied to society as a whole with the organization being a subsystem, and opines that functional imperatives generate the fault lines along which a social structure becomes differentiated. He stratifies technical, managerial and institutional layers, and interestingly says that there exists a qualitative break at the two lines in between. Parson’s framework though comprehensive was not particularly popular or practical towards furthering the frontiers of research.
5 Chapter 5: Organizations as open systems
The “general systems” theory founded by Ludwig von Bertalanffy stimulated the birth of the view that organizations are loosely coupled systems, characterized by an assemblage of parts with relations among them that are interdependent and loosely constrained. Boulding identifies a hierarchy of nine system types with increasing complexity, with levels 3 and 4 (cybernetic and open systems) being of particular interest.
Cybernetic systems are capable of self regulation, and the goals of the system are provided by a policy center based on the demands of the environment. The shift in thinking here is that such feedback controlled arrangements are “goal-directed” and not just “goal-oriented”, since it is the deviations from the goal state itself that determines the system behaviour rather than predetermined internally set goals.
Open systems are capable of self maintenance on the basis of a throughput of resources from the environment. Boundaries play an important role in the definition of open systems. General systems theorists elaborate the distinction between open and closed systems wrt negative and positive entropy respectively. Open systems can consume energy from the environment for their maintenance and growth. Open systems are also subject to the law of limited variety, where the systems’ variety is limited by the variety in its environment.
Systems design approach, contingency theory, two environmental approaches and Weick’s model of organizing are dealt with in this chapter.
Systems design, with complex probabilistic systems, employing simulation techniques is discussed. The structure is irrelevant and instead operational workflow and information flow between basic black-box units of the system are studied. The challenge facing system designers is how to create structures that maximize the strengths of each of the participant system components while minimizing the impact of their weaknesses.
Contingency theory is guided by the hypothesis that organizations whose internal features best match the demands of their environments will achieve the best adaptation. Lawrence and Lorsch (1967) propose that this “best match” occurs on two levels, the structure of the subunits suiting the specific environment and the mode of integration suiting the overall organization environment. Galbraith (1973) connects environment uncertainty and information processing, and views structure as an information processing vehicle.
Aldrich and Pfeffer (1976) identify two subtypes of the environmental approach: natural selection and resource dependence model. The former argues that environments differentially select certain types of organizations for survival based on the basis of fit between organizational forms and environmental characteristics. Three processes are emphasized; the creation of variety, selection of some types over others and the retention of some of these forms. The resource dependence model stresses on the adaptation processes, under which managers or dominant coalitions scan the relevant environment, formulate strategic responses and adjust organizational structure accordingly.
Weicks mode of organizing refuses to acknowledge the organization as a noun, but rather as an “organizing” process. Although Weick’s definition is complicated, in short it says that the activities of “organizing” are directed toward the establishment of a workable level of certainty.
Summarily, the organization is a dynamic system. The open systems perspective greatly emphasizes the role of the environment. Unlike the rational system that ignores it, or the natural system that treats it as a hostile constraint to be adjusted to, here the environment is perceived to be the ultimate source of materials, energy and information that are vital to the survival of the system, and even seen to be the source of the order itself! The evolution of organizational theory has certainly arrived at an exciting point with this advanced perspective and throws open many nascent opportunities for greater research.