Summary containing all the relevant theory discussed in the book for the course Organization Theory given in the first year of International Business Administration at the Vrije Universiteit Amsterdam. By learning this summary I personally passed the final exam.
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International Business Administration
Organization Theory (E_IBA1_ORGT)
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Chapter 1 Managing and Organizations
Learning objectives:
identify the impact that changes in the contemporary world are having on managing
and organization
be introduced to trends in the digital organizations in which much contemporary
managing and organization occurs
understand managing and organization as sensemaking
grasp the managerial rationalities that constitute much contemporary managing and
organization
familiarize yourself with some significant global shifts for future managing and
organization.
Organizational behaviour (OB) refers to the study of human behaviour in organizational
contexts. OB is an applied discipline that concerns itself with individual- level, group-level,
and organization- level processes and practices that inhibit or enable organizational
performance.
Perception is the process of receiving, attending to, processing, storing, and using stimuli
to understand and make sense of our world. The stimuli can be experienced through any and
all of the senses such as sight, sound, smell, taste and touch.
We can differentiate between managing as a practice, as something that we do, and
organizations as goal-oriented collectives, in which we are organized.
Management is the process of communicating, coordinating, and accomplishing action in the
pursuit of organizational objectives, while managing relationships with stakeholders,
technologies and other artefacts, both within as well as between organizations.
Organizations are tools: they are purposive, goal-oriented instruments designed to achieve a
specific objective. A tool is an extension of human agency: a hammer enables a hand to
hammer.
Improvements in productivity and quality would accrue when corporate cultures
systematically align individuals with formal organizational goals.
The decline in corporate jobs is a root cause of contemporary income inequality, as well-paid
jobs in career bureaucracies with clear routes to promotion were eviscerated.
There are not only new types of workers, but also organizations are changing. Robots are
carrying out mundane work, providing opportunities for open/platform-based collaboration
and transactional management that facilitate a market-based form of coordination, making
organization less reliant on hierarchies, and on long-term relationships with a trusted
workforce.
New public management replaces public sector bureaucracy with public managers and
citizens with customers, managed by targets and audits.
More growth occurs when cuts are made to the highest level of taxes but high-income tax
cuts ‘lead to increased spending on goods and services, which in turn could improve wages
for those lower-income earners who provided those goods, but it would also cause prices to
rise and would need to be paid for by either other tax increases or cuts to government
spending’. Economic growth occurs but at the cost of increased inequality as those on lower-
and middle-class incomes adjust to rising prices by consuming less. If the tax cuts are
,targeted at middle- and lower-class incomes, there is less overall growth but reduced income
inequality, as those from lower-income households can spend more on life’s necessities.
Principal agency theory has a fundamental premise that the provision of capital by
shareholders is a risk-based endeavour in which the risks can be minimized if the agents that
are managing individuals’ capital at a distance are also themselves shareholders.
Having principals and agents aligned with a common interest in share values, it is argued,
will create more efficient organizations because they are focused on the privileged goal of
increasing shareholder value.
Sensemaking, or the process through which individuals and groups explain novel,
unexpected or confusing events, is critically important in the study of organizations.
A frame defines what is relevant. All managing involves framing: separating that which
deserves focus from that which does not.
Managers that espouse the ideology of managerialism assume that organizations should be
normatively integrated by a single source of authority.
Framing occurs not only through sensemaking but also through sensegiving and
sensebreaking. Sensegiving attempts to influence the sensemaking of others so that others
come to accept a preferred meaning. Sensebreaking occurs when organizational members
disrupt existing sense to make alternative sense.
Sensemaking, sensegiving and sensebreaking are different ways of mediating the flow of
sense data that provides your informational environment. Sensemaking is the formulation of
accounts of what’s going on; sensegiving is the strategic attempt to frame others’ perceptions
to accord with the sense that you are making; and sensebreaking is the strategic attempt to
disrupt existing flows of sensemaking and sensegiving.
A leader’s role is to make, break and give sense to events.
Time and space are two fundamental coordinates of the way we relate to the world and the
ways in which we do so are socially constructed.
- Managing and organizing is very dynamic so innovation, change and tension are
characteristic of the way that events pan out.
- Managing and organization is never done in isolation from broader social trends and
contexts, which is why it is important to contextualize how it is being done.
- No organization or manager today can escape the effects of digitalization.
- Managing and organizations today are increasingly either global enterprises or
related to them as suppliers, markets, customers, employees, or shapers of others’
environment.
Chapter 2 Managing Individuals
Learning objectives:
develop an understanding of how psychology contributes to organizational behaviour
describe the process of perception and understand how it can affect performance
at work
outline how values drive individual behaviour
outline a range of personality theories
explain how positive psychology can improve people’s workplaces.
,Psychology is the study of our being or more simply the study of the human mind and
behavior.
Values are a person’s or social group’s consistent beliefs or sets of schemas about
something in which they have an emotional investment.
Fundamental self-interest does not necessarily provide welfare or products or services that
cannot be privately owned to generate income and so, the argument goes, government must
become involved in providing such public goods.
In organizations today, a ‘one size fits all’ management approach will not work.
Our values and beliefs are integral to all these working theories and assumptions about work,
organizations, and society. These values, beliefs and assumptions are inherent in the
workplace and become an important component of the management of people and
organizations.
Psychology at work provides answers to understanding and dealing with tensions and
opportunities that present themselves in the workplace.
Table 2.3. The Big Five personality factors:
Figure 2.1. Model of perception:
, Schemas are used to structure and organize information that we experience in our social
world and are often hierarchical. Schemas are so powerful that they are one of the most
important components of cognitive-behavioral therapy.
- Person schemas are structures of meaning that affect thinking, planning and
behavior concerning others.
- Self-schemas are specific self- conceptions we hold about ourselves, which we
believe are self-descriptive and highly important to possess
- Script schemas refer to schemas about how we operate in our world and understand
and remember information.
- Social schemas refer to our social knowledge.
- Role schemas refer to schemas about appropriate and inappropriate behavior in
specific contexts
Seeking out more information about others, learning about other cultures and subcultures,
knowledge and experience of other people, discussion, and open communication, and
practicing empathy and compassion are all ways we can avoid stereotyping people.
The self- fulfilling prophecy affects both how we perceive others and how we act when we
interact with them, but it also affects how we perceive and act ourselves.
Table 2.1. System 1 and System 2 thinking.
There are some common errors we make in judgements, interpretations, assumptions, and
beliefs in our social world.
- Stereotyping occurs most commonly in the absence of enough social cues to make
an informed assessment. In studies of prejudiced people, it was found that while
suppression works in the short term, it tends to work only with highly motivated
individuals who want to stop stereotyping people.
- The next error arises from self-fulfilling prophecies, which refers to the process by
which a person who holds a belief or expectation, irrespective of its validity, causes it
to come true because they behave and act as if it is true.
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