Short history of Organizational theory

Before 1930s:
Background:

Managers’ function is to plan production and treat the employees as robots (idea of scientific management)

Scientific management school:

-        Taylor (1911): The production process will be more efficient if the tasks are designed according to following rules:

parading simple-minded injuctions to plan ahead, keep records, write down politics, specialization, keep control to about six people.

Company Town (Barnard)

Barnard (1938):

Barnard takes a quite different view from Taylor. Based on his own experience in companies, he propose that employees are not robot, they share common goals, need communication and have to be willing to serve in the organization. He view the organization as cooperate system rather than scientific machines. From Barnard’s (1938) theory, three schools of thoughts emerge: 1) human relation school, which emphasize on interpersonal processes and how individuals are motivated by leaders to serve in the organizations. 2) behavioral decision school, which discusses how individuals with bounded rationality communicate with each other to solve conflicts. 3) institution school, which focus on discussing how organizations are infused with value, which determines the development of organizations (Selznick, 1948).

1930s-1940s:

Human relations school

-        Hawthorne experiment: good leaders increases workers’ morale and incentives

-        Roethlisberger and Dickson (1938) : trait of good leadership, group processes

-        Warren Bennis : change of organizations from temporary groups, temporary authority systems, leaderships, etc. System should be temperate

Bureaucracy:

-        Weber (1946): Bureaucracy is efficient mechanism and the characteristics of Bureaucracy.

-        Selznick (1948,1943): Political power is critical to organizations and the aim of organizations is to maintain its bureaucracy. He provides an approach to study bureaucracy.

Economics

-        Coase (1937): transaction cost theory, organizations exist because they are more efficient than market in reducing transaction costs.

1950s

Behavioral decision theory (early Weberian school) (Carneige school)

-        March and Simon (1958) : decision-making/behavioral model

Institution school(Columbia school):

-        Merton (1957): Organizations are cooperative systems and members share same value and common goals.

-        Selznick (1957): leadership in the organizations: core value is important for organizations to gain legitimacy and survive.

1960s

Contingency theory:

-        Thompson (1967): Uncertainty comes from technology, technology and environment has to fit each other

-        Drazin and Van de Ven (1985): Different forms for organizations

-        Lawrence  and Lorsch (1967): Complex organizations have both formal and informal parts.

-        Stinchcombe (1965): imprinting: organizations will be strongly influenced by their environment at the early stage of development and the influence will last long even when organizations have become mature.

Drawbacks of Bureaucracy:

-        Crozier (1964): 1) Bureaucracy is inflexible and inable to adapt to change 2) the rigid of tasks and human relations leads to less communication. Less communication makes the tasks and relationships more rigid. The vicious circle can only be broken when there are crisis.

Behavioral decision theory:

-        Cyert and March (1963): Behavioral theory of the firms: firms make decisions in a systematic way.

1970s

Background:

Oil crisis in 1973, which leads organizational theorists start to think that environment is more important.

Behavioral decision theory:

-        Cohen and March (1972): organizations can behave in a mindless way. The reason is that individuals are bounded rational, therefore, different individuals have different interpretation and solutions regarding to the same problem. Organizations as the collection of these individuals tend to reach their decision in a pretty random way.

Resource dependence theory

-        Pfeffer and Salancik (1978): The external control of organizations is the foundamental work for resource dependence theory. The main idea is that when the critical resources for one organization are controlled by another organization, the power between the two organizations are not balanced and the less powerful organization will try to obsorb the uncertainty created by the imbalanced power.

Population Ecology:

-        Hannan and Freeman (1977): This is the starting point of population ecology. Organizations are treated as a whole population. Organizations are differentiated by their structure and strategies (niches), which can be seen as different species. Organizations within the same species (niches) compete with each other for survival.  niches need enough legitimacy to hold as what they are.

Institutional theory:

-        Meyer and Rowan (1977): Institutions come from rationalized rules and routines. These rules and routines develop into myths and decouple from the real practices, because the audiences or other individuals that do not engage directly in the practices do not realize things have changed and they require that organizations should still keep these rules and routines (another way to say is that these rules and routines have been legitimized).

Economics:

-        Chandler (1977): the visible hand: Organization is efficient way for production

-        Alchian (1972): Firms as collection of teams and information. Descriptions of different types of firms.

1980s

Drawback of Bureaucracy:

-        Garson (1988): automatic social worker: bureaucracy is not as efficient as we have thought of.

Sensemaking:

-        Barley (1986): Same practices are adopted differently in the two organizations because managers make sense of the practices differently.

-        Daft and Weick (1984): organizations are interpretation systems. This is the core model of sensemaking.

Institution theory (Isomorphism)

-        DiMaggio and Powell (1983): three pillar of isomorphism. This is the starting point of new insititution theory.

-        Zucker (1987): Institutions come from organizations (mimic) or from environment (the state)

-        Tolber and Zucker (1983): two-stage diffusion.

Behavioral decision theory:

-        Levitt and March (1988): organizational learning: summary of organization learning as a sub branch of behavioral decision theory.

Economics:

-        Williamson (1981): TCE

-        Fama and Jensen (1983): Agency theory

-        Eisenhardt (1989): agency theory compare with TCE

Population Ecology:

-        Hannan and Freeman (1984): organizational form is hard to change because because of four internal constrains (investment in plants, equipment, and specialized personnel; limits on the internal information received by decision-makers; vested interests; organizational history)  and four external constrains (legal and economic barriers to entry and exit; constraints on the external information gathered by decision-makers; legitimacy considerations; the problem of collective rationality and the general equilibrium).

1990s

Behavioral decision theory:

-        March (1991): Exploration and Exploitation in organizational learning

Configuration theory

-        Meyer et al. (1993): the basic idea to understand what is configuration theory, which uses ideal type method to elaborate contingency theory

-        Ketchen et al (1993): Different approaches to empirically predict organization performances, what does it mean by fitting?

Bureaucracy:

-        Adler et al. (1996): Enabling and coercive bureaucracy

Sensemaking:

-        Porac, et al. (1995): Scottish Knitwear Producers decide their competitors by making sense of the environment.

-        Weick (1993): organizations when meet sudden change in the environment would choose not to act.

Institution theory (Isomorphism/Change)

-        DiMaggio and Powell (1991): new institutionalism that emphasize more on isomorphism, need to understand power struggle. The starting point of the third wave of institution theory – neoinstitution theory.

-        Friedland and Alford (1991): institutions are material and symbolic constructs.

-        Hirsch (1997): neoinstitutional theory lack social structure and emphasize on symboles and languages.

-        Heimer (1999): different institutions conflict with each other in one organization.

-        Westphal, Gulati and Shortell (1997): different network influence the diffusion of different practices

2000s

Configuration theory

-        Fiss (2007): set theory as a method to develop configuration theory

Population Ecology:

-        Carrol and Swaminathan (2000): Generalists and specialists have different strategies and occupy different kinds of markets. Generalists focus on economic of scale, while specialists focus on authenticity.

-        Dobrev and Kim (2006): Organizations within the same niches compete for resources but at the same time they enjoy the legitimacy gained by clustering within the same niche.

-        Hsu (2006): Specilists are more likely to gain preferences from the audiences, but generalists are assumed to be not an experts at any aspects.

-        Hsu and Hannan (2005): When organization identities have gain legitimacy, they become organizational forms that will be imitated by other organizations.

Resource dependence theory:

-        Casciaro and Piskoski (2009): The power relationship between two organizations do not need to be imbalanced, it can also be mutual dependent. This will influence organizations’ decision in obsorbing the constrains.

-        Santos and Eisenhardt (2009): the boundaries of the organizations are determined by how the actors in organizations frame and interpret it, which means the legitimacy of the boundaries is constructed by actors in new emerging market.

Behavioral Decision theory:

-        Levinthal and Rerup (2006): Combining mindful learning and mindless learning together

Sensemaking:

-        Rindova, et al. (2004): Organizations shape the competition with language games

Institution theory (Change of organizational forms)

-        Heugens and Lander (2009): Isomorphic process is still powerful and improve organizational performances

-        Thornton and Ocasio (2008): institutional logic

-        Kennedy and Fiss (2009): Different framing influences the diffusion processes

-        Suddaby and Greenwood (2005): Actors actively achieve legitimacy through rhetorical strategies

-        Green and Nohiria (2009): institutionalization is a change in argument structure.

-         

2010s

Behaviroal decision theory:

-        Complex system of behavioral learning

Sensemaking:

-        Whiteman and Cooper (2011): organizations make sense of their environment and the sense-making process is constrained by the physical materials. Understanding material environment is equally important.

Economics:

-        Arthurs and Hoskisson et al. (2008): conflict between multiple agencies

By Kate Jue Wang