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PowerPoint Presentation by Rajeesh Viswanathan

Jansons school of Business

PowerPoint Presentation by Rajeesh Viswanathan

Jansons school of Business

Organization Theory

Structure, Design, and Applications

Organization Theory

Structure, Design, and Applications

Third Revised EditionThird Revised Edition

Stephen P. Robbins and Mary MathewStephen P. Robbins and Mary Mathew

C H A P T E R

7C H A P T E R

7PART II: THE DETERMINANTS: WHAT CAUSES STRUCTURE?PART II: THE DETERMINANTS: WHAT CAUSES STRUCTURE?

An OverviewAn Overview

After reading this chapter, you should be able to:After reading this chapter, you should be able to:

Define technology.Define technology. Describe the contributions of Woodward, Perrow, and Describe the contributions of Woodward, Perrow, and

Thompson.Thompson. Explain the moderating influence of industry and size Explain the moderating influence of industry and size

on the technology-structure relationship.on the technology-structure relationship. Summarize how the concept of routineness runs Summarize how the concept of routineness runs

through most studies on technology.through most studies on technology. Identify the influence of level of analysis on the Identify the influence of level of analysis on the

technology-structure relationship.technology-structure relationship. Describe the effect of technology on complexity, Describe the effect of technology on complexity,

formalization, and centralization.formalization, and centralization.

DEFINITIONDEFINITION

OT RESEARCHERS DEFINE OT RESEARCHERS DEFINE TECHNOLOGY AS THE TECHNOLOGY AS THE INFORMATION, EQUIPMENT, INFORMATION, EQUIPMENT, TECHNIQUES AND PROCESSES TECHNIQUES AND PROCESSES REQUIRED TO TRANSFORM REQUIRED TO TRANSFORM INPUTS INTO OUTPUTS IN AN INPUTS INTO OUTPUTS IN AN ORGANIZATIONORGANIZATION

THE INITIAL THRUST: WOODWARD’S RESEARCH

WOODWARD categoriesed firms into three WOODWARD categoriesed firms into three types of technologies:types of technologies:

UNITUNITMASSMASSPROCESS PRODUCTIONPROCESS PRODUCTION

She treated these categories as a scale with increasing She treated these categories as a scale with increasing degrees of technological complexity, with unit being the degrees of technological complexity, with unit being the least complex and process the most complexleast complex and process the most complex

A careful analysis of her findings led Woodward to conclude that for each category on the technology scale (unit, mass, process) and for each structural component there was an optimal range around the median point that encompassed the positions of the more effective firms.

Effectiveness was a function of an appropriate Effectiveness was a function of an appropriate technology-structure fit.technology-structure fit.

KNOWLEDGE-BASED KNOWLEDGE-BASED TECHNOLOGY: PERROW’S TECHNOLOGY: PERROW’S

CONTRIBUTIONCONTRIBUTION BACKGROUNDBACKGROUND TWO DIMENSIONSTWO DIMENSIONS

TASK VARIABILITYTASK VARIABILITYPROBLEM ANALYZABILITYPROBLEM ANALYZABILITY

ROUTINE TECHNOLOGIESROUTINE TECHNOLOGIES ENGINEERING TECHNOLOGIESENGINEERING TECHNOLOGIES CRAFT TECHNOLOGIESCRAFT TECHNOLOGIES NONROUTINE TECHNOLOGIESNONROUTINE TECHNOLOGIES CONCLUSIONSCONCLUSIONS EVALUATIONSEVALUATIONS

Perrow defined technology as “the action that an Perrow defined technology as “the action that an individual performs upon an object, with or without individual performs upon an object, with or without the aid of tools or mechanical devices, in order to the aid of tools or mechanical devices, in order to make some change in that objectmake some change in that object

Two underlying dimensions of knowledge technologyTwo underlying dimensions of knowledge technology

a)a) The first dimension considers the number of The first dimension considers the number of exceptions encountered in one’s work. Labeled exceptions encountered in one’s work. Labeled task variability, task variability, these exceptions will be few in these exceptions will be few in number if the job is high in routinenessnumber if the job is high in routineness

b)b) The second dimension assesses the type of search The second dimension assesses the type of search procedures followed to find successful methods for procedures followed to find successful methods for responding adequately to task exceptions.responding adequately to task exceptions.

These two dimensions—task variability and problem These two dimensions—task variability and problem analyz ability—can be used to construct a two-by-two analyz ability—can be used to construct a two-by-two matrix. matrix.

The four cells in this matrix represent four types of The four cells in this matrix represent four types of technology: routine, engineering, craft, and non-technology: routine, engineering, craft, and non-routineroutine

Routine technologies (cell 1) have few exceptions and easy-to -analyze problems. The mass-production processes used to make steel or automobiles or to refine petroleum belong in this category.

Engineering technologies (cell 2) have a large number of exceptions, but they can be handled in a rational and systematic manner.

Craft technologies (cell 3) deal with relatively difficult problems but with a limited set of exceptions.

Finally, non-routine technologies (cell 4) are characterized by many exceptions and difficult-to-analyze problems.

Measuring TechnologyMeasuring TechnologyTask variabilityTask variability How many of these tasks are the same from day to day?How many of these tasks are the same from day to day? To what extent would you say your work is routine?To what extent would you say your work is routine? People in this unit do about the same job in the same way most of People in this unit do about the same job in the same way most of

the time.the time. Basically, unit members perform repetitive activities in doing their Basically, unit members perform repetitive activities in doing their

jobs.jobs. How repetitious are your duties?How repetitious are your duties?

Problem Analyzability:Problem Analyzability: To what extent is there a clearly known way to do the major types of To what extent is there a clearly known way to do the major types of

work you normally encounter?work you normally encounter? To what extent is there a clearly defi ned body of knowledge of To what extent is there a clearly defi ned body of knowledge of

subject matter which can guide you in doing your work?subject matter which can guide you in doing your work? To what extent is there an understandable sequence of steps that To what extent is there an understandable sequence of steps that

can be followed in doing your work?can be followed in doing your work? To do your work, to what extent can you actually rely on established To do your work, to what extent can you actually rely on established

procedures and practices?procedures and practices? To what extent is there an understandable sequence of steps that To what extent is there an understandable sequence of steps that

can be followed in carrying out your work?can be followed in carrying out your work?

ConclusionConclusion

Perrow then identified the key aspects of structure that Perrow then identified the key aspects of structure that could be modified to the technology:could be modified to the technology:

(1) the amount of (1) the amount of discretion discretion that can be exercised for that can be exercised for completing tasks,completing tasks,

(2) the (2) the power power of groups to control the unit’s goals and basic of groups to control the unit’s goals and basic strategies, strategies,

(3) the extent of (3) the extent of interdependence interdependence between these groups, and between these groups, and

(4) the extent to which these groups engage in (4) the extent to which these groups engage in coordination coordination of of their work using either feedback or the planning of others.their work using either feedback or the planning of others.

TECHNOLOGICAL UNCERTAINTY: TECHNOLOGICAL UNCERTAINTY: THOMPSON’S CONTRIBUTIONTHOMPSON’S CONTRIBUTION

LONG-LINKED TECHNOLOGY – Long-linked Technology. If tasks or operations are sequentially interdependent, Thompson called them long-linked. This technology is characterized by a fixed sequence of repetitive steps

MEDIATING TECHNOLOGY - mediating technology mediating technology as one as one that links clients on both the input and output side of the that links clients on both the input and output side of the organization. Banks, telephone utilities, most large retail organization. Banks, telephone utilities, most large retail stores, computer-dating services, employment and welfare stores, computer-dating services, employment and welfare agencies, and post offices are examplesagencies, and post offices are examples

Thompson’s third category—Thompson’s third category—intensive technology—intensive technology—represents a customized response to a diverse set of represents a customized response to a diverse set of contingencies. The exact response depends on the contingencies. The exact response depends on the nature of the problem and the variety of problems, nature of the problem and the variety of problems, which cannot be predicted accurately. This includes which cannot be predicted accurately. This includes technologies dominant in hospitals, universities, technologies dominant in hospitals, universities, research labs, full-service management-consulting research labs, full-service management-consulting firms, or military combat teamsfirms, or military combat teams

Thompson’s insights into structural terminology.Thompson’s insights into structural terminology.

TYING IT TOGETHER

INFLUENCE OF INDUSTRY AND SIZE –INFLUENCE OF INDUSTRY AND SIZE –Technology and structure are both multidimensional concepts. As a result, it is possible that technology may be related to structure although not in any simple, straightforward manner. There are, in fact, some logical arguments to support the idea that the industry within which the organization operates organization operates and the organization’s size confound a clear causal relationship between and the organization’s size confound a clear causal relationship between technology and structure.technology and structure.

Industry.Industry.Organizations within any given industry may have to adopt the conventional Organizations within any given industry may have to adopt the conventional

core technology to be competitive. Just as industry often influences the core technology to be competitive. Just as industry often influences the efficient operating size of an organization, its degree of competition, or efficient operating size of an organization, its degree of competition, or extent of government regulation, it can also limit the viable set of extent of government regulation, it can also limit the viable set of technology optionstechnology options

Size: the larger the size of the organization, the smaller the role the larger the size of the organization, the smaller the role technology is likely to play Conversely, the smaller the technology is likely to play Conversely, the smaller the organization, the more likely it is that the whole organization will be organization, the more likely it is that the whole organization will be impinged upon by the production work flow or operating core. They impinged upon by the production work flow or operating core. They then noted that the firms then noted that the firms

The common Denominator: RoutinenessPerrow, too, presented two extremes-routine and non-routine technologies. Perrow, too, presented two extremes-routine and non-routine technologies. His “in-between” technologies—engineering and craft—also differ on His “in-between” technologies—engineering and craft—also differ on routineness, the former more standardized than the latter. routineness, the former more standardized than the latter.

Finally, Thompson’s categories include two technologies that are relatively Finally, Thompson’s categories include two technologies that are relatively routine (long-linked and mediating) and one that is non-routine (intensive). routine (long-linked and mediating) and one that is non-routine (intensive).

TECHNOLOGY AND STRUCTURETECHNOLOGY AND STRUCTURE

Technology and ComplexityTechnology and Complexity

The greater the routineness, the fewer the number of The greater the routineness, the fewer the number of occupational groups and the less training possessed occupational groups and the less training possessed by professionalsby professionals

Technology and FormalizationTechnology and Formalization

Routine technologies permit management to Routine technologies permit management to implement rules and other formalized regulations implement rules and other formalized regulations because how to do the job is well understood , and the because how to do the job is well understood , and the job is repetitive enough to justify the cost to develop job is repetitive enough to justify the cost to develop such formalized systemssuch formalized systems

Technology and CentralizationTechnology and Centralization

Both formal regulations and centralized decision Both formal regulations and centralized decision making are control mechanisms, and management making are control mechanisms, and management can substitute them for one another. Routine can substitute them for one another. Routine technologies should be associated with centralized technologies should be associated with centralized control if there is a minimum of rules and regulations. control if there is a minimum of rules and regulations. However, if formalization is high, routine technology However, if formalization is high, routine technology can be ac companied by decentralizationcan be ac companied by decentralization

ConclusionConclusion

We concluded that the technological We concluded that the technological imperative, if it exists, is supported best by imperative, if it exists, is supported best by job-level research, is most likely to apply only job-level research, is most likely to apply only to small organizations and to those structural to small organizations and to those structural arrangements at or near the oper ating core, arrangements at or near the oper ating core, and that “routineness” is the common and that “routineness” is the common denominator underlying most of the research denominator underlying most of the research on technologyon technology