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Organizational Theory, Design, and ChangeChapter 1:
Purpose of organizations and why they exist: able to satisfy the needs of customers, increase
specialization and division of labour. Large scale economy. To manage organizational environment.
Economize transaction costs. Exert power and control.
Relationship organizational theory and design and change and differentiate between
organizational structure and culture: P.30
How managers utilize theory to increase organizational effectiveness: OI 1.3 p.37
The three principal ways in which managers assess and measure organizational effectiveness:
Table 1.1 p.38
Chapter 2:
Identify the various stakeholder groups and their interests or claims on an organization.
Table 2.1: Inducements and contributions of organizational stakeholders
Understand the choices and problems inherent in distributing the value an organization creates.
Appreciate who has authority and responsibility at the top of an organization, and distinguish
between different levels of management.
Figure 2.1: The top-management hierarchy
Describe the agency problem that exists in all authority relationships and the various mechanisms,
such as the board of directors and stock options, which can be used to help control illegal and
unethical managerial behaviour.
P.63: shareholders and principals are at an information disadvantage
Discuss the vital role that ethics plays in constraining managers and employees to pursue the goals
that lead to long-run organizational effectiveness.
P.65: Top managers and organizational Ethics.
Lecture 1: 07-09-2020
Not all companies have a board of directors
Top management hierarchy moet je weten
Principal Agent Theory and solving
Stakeholder Theory
,Shareholders vs Stakeholders: shareholders are stakeholders, but not all stakeholders are
shareholders.
Stakeholder map
Four design Challenges:
To choose the right amount of vertical (who is who’s boss) and horizontal differentiation (roles in
organization)
Balance differentiation (opdelen van verschillende eigenschappen) and integration (process of
coordination tasks)
1. To choose the right extent of vertical and horizontal differentiation
2. Balance differentiation and integration
3. Balance centralization and decentralization
4. Balance standardization and mutual adjustment
, Specialisation limits communication
Integration vs differentiation
Ideal balance of centralization: Middle and low managers at scene of action can take important
decisions, and top managers focus on long term goals!
Formalization:
The use of written rules and procedures to standardize operations
• Rules: Formal, written statement that specify the appropriate means for reaching desired goals
• Norms: Standards or styles of behavior that are considered acceptable or typical for a group of
people
• Socialization: Organizational members learn the norms of an organization and internalize these
unwritten rules of conduct
Contingency Theory of organizational design:
Management approach in which design of organizations structure is tailored to the sources of
uncertainty facing an organization. (design its structure to its environment). P.137.
• Explain why a hierarchy of authority emerges in an organization and the process of vertical
differentiation
• Discuss the issues involved in designing a hierarchy to coordinate and motivate organizational
behavior most effectively
• Understand how centralization and standardization provide methods of control that substitute
hierarchical structures
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