Organizations: groups of people who work interdependently toward some purpose. 3. Key feature of organizations: they are collective entities. People interact with each other in an organized way. 4. Second key feature: collective sense of purpose. (Collective purpose isn’t always well define or agreed on.)
Organizational effectiveness: a broad concept represented by several perspectives, including the organization’s fit with the external environment, internal subsystems configuration for high performance, emphasis or organizational learning, and ability to satisfy the needs of key stakeholders.
Best definition of organizational effectiveness if through a composite of four perspectives: 1. Open systems
2. Organizational learning
3. High-performance work practices
“Organizations are effective when they have a good fit with their external environment, are learning organizations, have efficient and adaptive internal subsystems, and satisfy the need of key stakeholders.”
A perspective which holds that organizations depend on the external environment for resources, affect that environment through their output, and consist of internal subsystems that transform inputs into outputs. Traditionally focused on physical resources that enter the organization and are processed into physical goods (outputs.) 5. As open system, organizations depend on the external environment for resources, including raw material, job applicants, financial resources, information, and equipment. 6. External environment also consists of rules and expectations 7. Organizational subsystems are also systems with their own subsystems (like Russian doll)
8. According to the open system perspective, organizations are effective when they maintain a good “fit” with their external environment. 9. Ex. Companies with a poor fit with the environment offer the wrong products and operate inappropriately in their environments.
10. Open system perspective also defines effectiveness by how well the company operates internally. (How well it transforms inputs into outputs.) * Organizational efficiency (productivity): ration inputs to outcomes. * Adaptive and innovative transformations are also needed.
Organizational Learning Perspective
Perspective which holds that organizational effectiveness depends on the organization’s capacity to acquire, share, use, and store valuable knowledge. 11. Also called knowledge management
12. Knowledge main driver of competetive advantage
13. Knowledge acquisition: hiring individuals or acquiring entire companies; learn new methods from external sources; experimentation 14. Knowledge sharing: distribute Knowledge to the necessary people in the organization; often through structured and informal communication 15. Knowledge use: apply it in ways to add value to the rim and its stakeholders; requires an organizational structure that supports learning 16. Knowledge storage: any means knowledge is held for later retrieval; this process creates organizational memory. Individual practices hold less explicit/tactical data.
(Exhibit 1.2 – page 8)
17. Absorptive capacity: (knowledge prerequisite) the ability to recognize the value of new information, assimilate it, and use it for value-added activities. 18. Intellectual capital: a company’s stock of knowledge, including human capital, structural capital, and relationship capital. * Most obvious from of intellectual capital – human capital: the stock of...