Technology impacts organizations at every level. Organizational technology is defined by Jones (2010) as “the combination of skills, knowledge, abilities, techniques, materials, machines, computers, tools, and other equipment that people use to convert or change raw materials, problems, and new ideas into valuable goods and services” (p. 240). In other words technology determines the level of efficiency of organizations. This paper highlights how technology affects organizational efficiency and provides research to explain this concept. Also, theories by Joan Woodward, Charles Perrow, and James D. Thompson will be reviewed to explain how technology influences organizational structure. Finally, these concepts will be used to predict the structures of four types of organizations.
So how does technology increase organizational efficiency? Basically, technology improves the conversion process from input to output within an organization (Jones, 2010). Technology improves overall efficiency and reduces costs at every level of the conversion process while improving quality and service. This occurs at every stage from input to conversion to output.
At the input stage technological skills, techniques and procedures allow organizations to more effectively, and successfully, handle environmental factors (Jones, 2010). For example, changes in the market can affect pricing from suppliers and the technological skills to find the best pricing for quality materials. During the conversion process the machines, techniques, and procedures established by technology determine the transformation from input to output (Jones, 2010). At this stage improvements in technology means more efficiency and less cost. When input is converted to output technology allows the best possible and most efficient method to transfer goods and services to external stakeholders (Jones, 2010). For example, improved methods to test products, market products, and sell products, offers efficiency in transferring the finished product to customers. Therefore, increased efficiency determines the ability to meet the needs of external stakeholders while performing organizational processes in a manner that benefits the organization and internal stakeholders at the optimal level. The next few paragraphs will look at how technology affects the organization by comparing the theories of Joan Woodward, Charles Perrow, and James D. Thompson.
Woodward, Perrow, and Thompson challenged earlier beliefs that focused on universal methods for effective organizational structure (Proven Models, 2010). The theories presented by Perrow and Thompson build on the concepts of Woodward. Woodward’s study focused on the relationship between organizational structure and performance (Proven Models, 2010). This led to the contingency approach describing external conditions as the determinant of effective organizational structure (Proven Models, 2010). However, Woodward’s theories failed to describe all organizations since it focused mainly on small organizations in manufacturing (Proven Models, 2010). Thompson and Perrow attempted to fill the gaps in Woodward’s research.
Joan Woodward explained the concept of technical complexity to describe the effect of technology on structure and differentiate technologies. Technical complexity is the measure of how much production techniques can be programmed to be predictable and controlled (Jones, 2010). Her studies showed a relationship between structure and performance when the type of technology was used as a variable (Proven Models, 2010). High technical complexity means conversion processes are fully understood and predictable, whereas low technical complexity depends more on specific skills of individuals which is less predictable (Jones, 2010) This idea revealed technology as the main determinant of structure. Therefore, operating with a specific technology requires a certain structure to be...