Critically examine the architecture, routines, and culture (ARC) framework of organisational design as proposed by Saloner, Shepard and Podolny in Strategic Management.
The design of an organisation is highly crucial for a firm in today’s world in order for it to achieve and sustain its competitive advantage that will place the firm in a stronger position than its rivals. The firm can manipulate the components of organisation design, fit these elements with one another and with the strategy, to impact the firm’s performance. Hence, the goal for the organisation is to have a good fit between the firm’s design and its competitive advantage in order for the firm to be strategically aligned with the strategy. Any effective design will have to address 2 general problems: the coordination and incentive problems and must do so in a way that supports the organisation’s strategy. The firm can make use of the Architecture, Routines and Culture (ARC) framework to grapple these problems. This essay will firstly describe how the ARC framework can be implemented accordingly. An effective design will depend on the 3 elements working together and so, these interactions will be analysed. In addition, the implications of the framework will be examined too.
To start, we need to define each component of the ARC framework. Firstly, the architecture refers to the dividing of the firm into subunits and establishing linkages among these groups. Secondly, routines are the formal and informal procedures while carrying out tasks developed from repetition. They embody established interfaces which pertains certain expectations about what will flow across them and a protocol for accomplishing the transfer. Lastly, culture is the commonly held values and beliefs of individuals within the organisation and once deeply embedded, is the evaluative criteria for behaviour and decision making in the firm.
The 2 main challenges of organisation design are the coordination and incentive problems. As they are interrelated, their effects are intertwined and addressing one could impact the other. The coordination problem refers to the challenge of establishing an
To start, we need to define each component of the ARC framework. Firstly, the architecture refers to the dividing of the firm into subunits and establishing linkages among these groups. Secondly, routines are the formal and informal procedures while carrying out tasks developed from repetition. They embody established interfaces which pertains certain expectations about what will flow across them and a protocol for accomplishing the transfer. Lastly, culture is the commonly held values and beliefs of individuals within the organisation and once deeply embedded, is the evaluative criteria for behaviour and decision making in the firm.
The 2 main challenges of organisation design are the coordination and incentive problems. As they are interrelated, their effects are intertwined and addressing one could impact the other. The coordination problem refers to the challenge of establishing an