“DIFFERENTIATION AND INTEGRATION IN COMPLEX

ORGANIZATIONS”

Presented by Hila Lifshitz Doctoral Student, Management

Organizational Analysis

Feb 23, 2010

Lawrence & Lorsch 1967

Which organizational structure is best?

?

Synopsis: “Pre L&L”

1. There is no one best way to organize: The best structure is a function of the environment

2. Organizations are complex and their subsystems need to be analyzed separately• Each subsystem’s optimal structure depends on its

subenvironment3. Due to the high organizational differentiation

organizations need to diligently manage their integration mechanisms

Synopsis: L&L

Org

Environment

Research question The basic concepts used in this examination of the internal

functioning of large organizations are differentiation and integration Differentiation: the state of segmentation of the organizational system

into subsystems, each of which tends to develop particular attributes in relation to the requirements posed by its relevant external environment.

Integration is defined as the process of achieving unity of effort among the various subsystems in the accomplishment of the organization‘s task.

Organizations are complex. Past analysis made simplifying assumptions or analyzed only limited aspects of the organization

What pattern of differentiation and integration of the parts of a large organizational system is associated with the organization's coping effectively with a given external environment?

Research question:

Unit of analysis and Method The primary unit of analysis: The organizational system:

organizations and their larger subsystems An organization = a system of interrelated behaviors of people who are performing

a task that has been differentiated into several distinct subsystems, each subsystem performing a portion of the task, and the efforts of each being integrated to achieve effective performance of the system

The unit of analysis is a sociological entity but they do not view individuals in organizations as passive instruments of organization, but as feeling, reasoning, and motivated beings.

They conduct a comparative study of six organizations operating in the same industrial environment (plastics industry), mainly using interviews.

They assume that organizations and their subsystems are influenced by their environment

Each major subsystem is seen as coping with its respective segment of the total external environment: Marketing& Sales market subenvironment Production the technical-economic subenvironment, research and development the scientific subenvironment.

They hypothesize that four attributes of an organizational subsystem would vary with the relevant subenvironments.

Subenvironment Certainty

H1, H2 : Degree of formalized structure and orientation

FormalizedStructure

H1

Social vs. Task members’ orientation

H2Subenvironment Certainty Task orientationModerate Certainty

High Certainty

Low CertaintySocial orientationTask orientation

The time orientations of subsystem members

H3, H4 : Time Orientation and Goals of Members

H3time required to get definitive feedback fromthe relevant subenvironment

Subenvironment GoalH4Subsystem members’ concern

Production members’ concern

Marketing & Sales members’ concern

Customers and competitive actionOperation of equipment and suppliers actions

Research and development

Science

Differentiation attributes

H5, H7 : integration efficiency and devices

Integration efficiencyH5

[In the same org., for a pair of subsystems with similar degree of requisite integration]

Environment requirements for Differentiation & integration

Integration devicesH7

H6 : Integration Mechanisms

Organization performanceH6The fit of both differentiation & integration subsystems with their Subenvironment

DiscussionContribution The contingency theory challenged the assumption that there is

one best way to organize and that it cannot be determined without considering the org environment

Their insight about the subsystems of the organization and how they effect their members was new and still poses a challenges for organizational analysis

Their emphasis on the tension between differentiation and integration as a prime obstacle to manage is still an unsolved and important topic in the literature and in the field

It is the first empirical studies of this kind Rakesh Khurana: Contingency theory had a huge impact of the

organizational field and in a way might have led to the divide between micro org behavior (teams…) and Macro Ob (the org and its environment)

DiscussionCritic and thoughts: The organization-environment relationship developed was static and

deterministic (as acknowledge by the authors) Causality is not established from cross sectional data yet they

implicitly assume that environment usually shapes the org (evident in their recommendation to organizations)

The authors believe they could have done more to recognize the role of strategic choice in determining what specific environment the organization encountered

Is contingency theory is the ultimate solution to every important debate in the literature? Where will that lead us?

Where are we heading? Is contingency theory is the ultimate solution to every important

debate in the literature? Where will that lead organizational theory?