Organizational Theory: Determinants of Structure ----------------...

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Organizational Theory: Determinants of Structure -------------------------------------------------------------------------------- the Objective Here Is to Understand Why Organizations Have the Structure That They

By | December 2010
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Organizational Theory:
Determinants of Structure

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The objective here is to understand why organizations have the structure that they do. By "structure" I mean things like degree and type of horizontal differentiation, vertical differentiation, mechanisms of coordination and control, formalization, and centralization of power. See handouts page for more information on organizational structure.

According to Taylor, Fayol, Weber and other classical theorists, there is a single best way for organization to be structured. Yet organizations vary considerably on structural attributes. The objective of much research has been to understand what determines these variations. Is it random or systematic? Are some organizations simply less perfect than others, or are different designs better for different situations?

Contingency Theory
In contrast to the classical scholars, most theorists today believe that there is no one best way to organize. What is important is that there be a fit between the organization's structure, its size, its technology, and the requirements of its environment. This perspective is known as "contingency theory" and contrasts with the perspective of classical theorists like Weber, Taylor, Fayol, etc. who thought that there probably was one way to run organizations that was the best.

Size
This refers to capacity, number of personnel, outputs (customers, sales), resources (wealth).

Blau's studies show that differentiation (# of levels, departments, job titles) increases with size, but at a decreasing rate. In contrast, the % of the organization that is involved in administrative overhead declines with size, leading to economies of scale.

Increasing size is also related to increased structuring of organizations activities but decreased concentration of power.

Managerial practices, such as flexibility in personnel assignments, extent of delegation of...