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Formal theories play a crucial role in understanding and analysing complex
phenomena in various fields, including public organization. In this essay, we will
evaluate the reasons why studying formal theories is important and explore the three
main themes in building theories of public organization. Researchers and business
professionals can use or create different approaches for understanding techniques
that may help an organization meet its goals. Organizational theory is one way that
professionals can study productivity and efficiency within businesses and
bureaucracies. Understanding what organizational theory can is help managers and
other business leaders decide which approach to implement within their business or
institution.
Formal theories
Formal theorists are sometimes critical of the more inductive approaches. In fact,
many claim that only formal theories qualify as "theory" at all; they demote other
general propositions to the lesser status of atheoretical "empirical generalizations" or
“stylized facts.” This is little more than intellectual snobbery that inflates the value of
deduction and devalues the inductive processes required for building any good theory.
However, formal theories have two characteristics that make them different from, if not
better than, other sorts of theory. First, formal theories have clear and explicit
assumptions. They have to; without premises, it would be impossible to derive
implications.
Stating assumptions explicitly makes it possible for other scholars to see the
relationship between one study and another as a sort of tree diagram. The
assumptions they share locates their origins on the same trunk or branch; the different
assumptions they make push them out onto different branches and twigs. Explicit
assumptions therefore provide a way to achieve theoretical integration.
Lacking this guidance, the more inductive approaches are harder to integrate. They
end up with conclusions that are confined to provisionally bounded temporal-spatial
domains that rarely coincide perfectly with the domains of other studies. Second,
formal theories also have a heuristic: a hypothesis-generating procedure that is
logically rigorous, or “truth preserving.” It allows the theorist to say with perfect
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