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Organizational theory college notes
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Lecture notes for organizational theory (OT)
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Organization theoryLecture 1,
Goal interdependence: the extent into which the achievement of a goal is hindered or facilitated by
other goals.
Positive goal interdependence: the achievement of goal 1 facilitates the realization of goal 2
Negative goal interdependence: the achievement of goal 1 hinders the realization of goal 2.
Only when you add up/combine the goal achievement/bonuses at the level of the organization, we
can observe the goal interdependencies and their organizational effects.
The challenge with “theory”.
WE need an integrated and a focused view
Most people contrast practice with theory, AND like examples more than theories
But: practice suffers from partial views that hinder more complete observation, and thus
(better) explanations!
Whereas generalization – being able to claim validity of a certain mechanism over a large
sample of organizations- requires abstraction from the individual firm of practice, based on
impartial observation.
So: nothing as practical as a good theory!
,Lecture 2: what is theory?
(papers over organizational theory mandatory (Whetten, Sutton and Mayer)
Core concepts: organizations
1. Social entities that
2. Are goal-directed
3. Are designed as deliberately structured and coordinated activity systems, and...
4. Are linked to distinct external environments.
Theory: a definition
‘a theory consists of a set of interrelated concepts, definitions and propositions that explain
or predict events or situation by specifying relations among variables’.
‘the word “theorise” comes from the Greek word “theories” which consists of a blend of two
words, “Thea” which means to see or observe, and “horan” which means to see a think
attentively or to contemplate it.
What have we learnt?
A theory…
Focusses on a small part of reality
Abstracts of many other relevant aspects
Helps us see detail this way
Helps us understand that limited part of reality better
Is NOT the whole store, and needs to be seen in a larger theoretical context?
Whetten 1989
A theory:
Consists of a set of concepts (what) and the relationships that tie them together (how) into
an explanation of the phenomenon of interest (why)
Build on a set of assumption that form the foundation for a series of logically interrelated
claims.
The elements of a theory
The what has to be clear
The how has to be clear
The why has to be clear.
What and how: content of hypothesis.
Why: what makes the effect logical? a short
“story” that explains what makes the effect of x on y
plausible, with reference to either former theoretical work, or combined empirical findings.
What to look for in each theory?
Know the dependent and independent variable
Define the concepts, specify the relations between the concepts, and give arguments (why)
for these relations
Are aware of the timeframe (when), place (where), unit of analysis (who) to which your data
apply
Can reproduce, understand, and compare theories in terms of levels of analysis, main
assumptions, main concepts, main arguments!
How new theories develop ( mayer, K. J. and R. T. Sparrowe (2013))
, Option 1: change WHAT
o Same explanatory variables, but a new dependent variable
o Same dependent variable, but new/additional independent variables.
Option 2: change WHY
o Same dependent and explanatory variables, but a different story for why they are
related.
Option 3: change HOW
o Same dependent and explanatory variables, but a different relation between them.
Option 4: change WHEN
o Same dependent variable and explanatory variables, but different time period
captured with data – say 1 month, 1 year, 5 years.
What theory is not ( Sutton, R. I., & staw, B. M. (1995).)
References are not theory
Data are not theory
Lists of variables/concepts are not theory
Diagrams are not theory
Only hypotheses are not theory
Functions of organization theories
OTs open up your mind and make you sensitive to ‘alternative’ ways of looking certain
phenomena’, and to integrate ‘partial truths’.
OTs organize your thinking into ‘systematic thinking’ and ‘thinking twice’ before acting!
Systematic thinking prevents people from confusion of tongue and facilitate a systematic
debate and more informed intervention.
HOWEVER: ANY organization theory will necessarily have to ignore some aspects of
organizations and be overly simplistic about some others!
The 5 theories offer answers to 6 big organizational questions, that allow you to generate a bigger
picture.
1. How can organizations organize their interaction with the environment?
a. Inter-organization theories (TCT and RDT)
Once organizations are formed/born:
2. How do organizations manoeuvre in their environment?
3. How do organization set goals?
a. Goal setting theory
4. what makes organizations different?
a. Dynamic capabilities theory
5. What causes organizations to become accepted entities?
a. Legitimacy theory
6. When do (departments/teams in) organizations compete, when do organizations
collaborate?
a. Social interdependence theory, inter-organizational theories
So, organizations are our elephant (the 6 blind men and the elephant)
Organizations must be different enough to remain competitive, but they also have to be
similar to remain legitimate (Q4 and 5)
They must compete on different markets on supply side, and on the demand side.
Simultaneously they must collaborate when they lack control over resources. (Q1, Q4, Q5
and Q6)
, Organizational goals should be smart, avoid negative interdependence, and facilitate positive
interdependence (Q2)
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