Theories of the firm (an overview of organizational theories)

The scientific management approach. Applying scientific management to today’s conditions. Weber’s bureaucratic approach. Features of application of administrative, human relations’, organism and contingency theories of the firm. Socio-technical systems.

Рубрика Менеджмент и трудовые отношения
Вид курсовая работа
Язык английский
Дата добавления 14.06.2017
Размер файла 470,3 K

Отправить свою хорошую работу в базу знаний просто. Используйте форму, расположенную ниже

Студенты, аспиранты, молодые ученые, использующие базу знаний в своей учебе и работе, будут вам очень благодарны.

Размещено на http://www.allbest.ru/

1

MINISTRY OF EDUCATION AND SCIENCE OF THE RUSSIAN FEDERATION PLEKHANOV RUSSIAN UNIVERSITY OF ECONOMICS

INTERNATIONAL BUSINESS SCHOOL

DEPARTMENT OF ECONOMIC THEORY

Written paper in Economics of the firm

"Theories of the firm (an overview of organizational theories)"

Students: Lomakina Daria

Karetnikova Margarita

Group: 5203

Supervisor: Anna A. Dokukina, Ph. D.

Contain

  • Introduction
  • Classical theories
  • 1) The scientific management approach
  • Applying scientific management to today's conditions
  • 2) Weber's bureaucratic approach
  • Applying bureaucratic approach to today's conditions
  • 3) Administrative theory
  • Applying administrative management to today's conditions
  • Applying human relations' theories to today's conditions
  • Applying organism theory to today's conditions
  • Socio-technical systems
  • Applying socio-technical approach to today's conditions
  • Contingency theories
  • Burns and Stalker
  • Lawrence and Lorsch
  • Differentiation
  • Integration
  • Applying contingency theory to today's conditions
  • Conclusion
  • Bibliography

Introduction

The table which demonstrates the individual percentage of each author's participation

The table of contents

Lomakina Daria

Karetnikova Margarita

In pages

4,5,6,7,12,13

7,8,9,10,11

In %

55

45

Modern world - the society of XXI century - is developing at extremely high speed. Businesses seem to evolve faster, within a much shorter period than they used to do in previous centuries. Therefore, they need a tight regulation and a strong managerial staff who push the companies through all the competition and try to avoid unfavorable circumstances.

This paper work is devoted to the revealing the essence of each theory and application it to up-to-date market and economic conditions. Only main well-defined and highly recognizable theories are taken into consideration due to their great ability to be accepted by the humanity and especially managers nowadays. Picture number one http: //www.uio. no/studier/emner/matnat/ifi/INF5890/v13/material-to-download/lecture-presentations/Feb_6_ organization-and-management-theories/overview-of-theories-on-organizations-and-management-inf5890-v2013. pdf gives a clear understanding of how many such theories exist in our world today. Although still they are all combined into groups which are not numerous, it is better to focus on some basics and to show how the theories which were popular hundred years ago are used in 2017.

Picture 1

Therefore, this article focuses on the following aspects.

Classical theories

the scientific management approach

Weber's bureaucratic approach

administrative theory

Human relations' theories

Elton Mayo and Hawthorne

Other theories (generalized)

System theories

Organization as organisms

Socio-technical systems

Contingency theories

Burns and Stalker

Lawrence and Lorsch

Differentiation

Integration

All these theories have their own representatives with their own opinion towards the managerial process in the firm. Step by step this work will refresh the knowledge about main features and approaches and afterwards by analyzing the structure of an average corporation (preferably a corporation since it is the most common type of ownership) or sole proprietorship, partnership, etc., if theory applies best to them.

theory firm management

Classical theories

Classical theorists focused on organization's output and productivity. The main assumption of classical theories is that the human, as a social and working being, is relatively predictable in his or her actions in determined situations, or these scientists of early 1900s state that "…if a certain managerial style or set of conditions is applied to the working environment, then individuals will respond in a predictable way". David Campbell, Tom Craig "Organizations and the business environment". [page 7]

1) The scientific management approach

This theory is based on the concept of planning of work to achieve efficiency, standardization, specialization and simplification through mutual trust between management and workers.

The principles of scientific management are as follows:

development of optimum organization structure via time and motion study and ergonomic design

development of scientific methods to replace the old `rule of thumb' practices

scientific selection and training of employees

motivation by money

This approach is usually called "Taylor's scientific management approach" since Taylor was the first to develop this idea. Consequently, such a phenomenon as Taylorism appeared and introduced its own principles and rules now known worldwide.

However, not only Taylor made a great unbelievable contribution, but Frank and Lillian Gilbreth (the principles of motion economy) and Henry Gantt (Gantt chart) as well.

Applying scientific management to today's conditions

There is little space for Taylor's ideas in today's world. But the writings of people such as Michael Porter (born 1947) and Michael Hammer (born 1948), with their emphasis on breaking business down into measurable and therefore more controllable activities (a lot of departments appear, which cumulate in corporations, where the management system is like an old branchy tree), let nothing more than a slight echo of Taylor's ideas spread today.

While Taylorism isn't practiced much today, scientific management did provide many significant contributions to the management practice. It introduced systematic selection and training procedures, it provided a way to study workplace efficiency, and it encouraged the idea of systematic organizational design.

2) Weber's bureaucratic approach

"Precision, speed, unambiguity, knowledge of files, continuity, discretion, unity, strict subordination, reduction of friction and of material and personal costs - these are raised to the optimum point in the strictly bureaucratic administration". https: //www.brainyquote.com/quotes/authors/m/max_weber.html

The concept of bureaucracy was first put forward by the German academic and sociologist, Max Weber (1864-1920).

"The Theory of Social and Economic Organization" was an attempt to examine why people obey orders, and in it Weber described three types of leadership:

the charismatic

(suits an organization in its early days, when it relies on the vision of a single person to push it towards its goal)

the hereditary

(is suitable for an organization whose rules and precedents are well established)

the bureaucratic

(everything runs with machine-like efficiency, and authority and control are exercised "on the basis of knowledge")

There are four main features of bureaucracy as follows:

Specialization

Hierarchy of authority

System of rules

Impersonality

Applying bureaucratic approach to today's conditions

Now let's have a look at the application of this theory today.

Bureaucracy remains relevant and necessary to contemporary organizations, especially to those which are characterized by large-scale size, routine tasks and to those performance of which is essentially and vitally relies on high degree of hierarchy and formalization of bureaucratic form.organization management is supposed to take into consideration factors affecting efficiency of bureaucracy application such as quality of labor force, cultural characteristics and continuous improvement of this management style to catch up with quick change and high demand.

3) Administrative theory

The Administrative Theory is based on the concept of departmentalization: the different activities to be performed for achieving the common purpose of the organization should be identified and be classified into different groups or departments. Unlike the scientific management theory of Taylor where more emphasis was on improving the worker's efficiency and minimizing the task time, here the main focus is on how the management of the organization is structured and how well the individuals are organized to accomplish the tasks.

The administrative theory is given by Henri Fayol, who believed that more emphasis should be laid on organizational management and the human and behavioral factors in the management. "To manage is to forecast and plan, to organize, to command, to co-ordinate and to control".3

During the early XX century, Fayol developed 14 principles of management to help managers manage their affairs more effectively:

Division of work

Delegation of authority

Discipline

Unity of commands

Unity of direction

Interrelation between individual interests and common organizational goals

Compensation package

Centralization

Scalar chains

Order

Equity

Job guarantee

Initiatives

Esprit de corps

Applying administrative management to today's conditions

The Administrative theory views communication as a necessary ingredient to successful management and many of Fayol's practices are still alive in today's workplace.

The elements and principles of management can be found in modern organizations in several ways: as accepted practices in some industries, as versions of the original principles or elements, or as traces of the organization's history to which alternative practices and philosophies are being applied. The U. S.military is a perfect example of an organization that has continued to use these principles.

Human relations' theories

The human relations' theories says that because organizations are composed of humans, focusing on human needs and motivation is the way to bring about optimal organizational output. The main belief of human relations' theory is that people are the key resources of an organization. This theory focuses on workers' productivity and motivation, their attitudes towards managers and recognition of their contributions.

Human relations management theories were created based on the Hawthorne studies conducted by Professor Elton Mayo. The human relations movement was propelled by the Hawthorne studies. Many theorists such as McGregor, Herzberg, Vroom and others have developed their own employee motivation beliefs and concepts.

Elton Mayo and Hawthorne

Elton Mayo founded the Human Relations Movement. Experiments undertaken by Mayo took place at the Hawthorne plant in the USA during the 1930s. His work illustrated that if the company or managers took an interest in employees and cared for them, it had a positive effect on their motivation.

Other theories (generalized)

In 1943, Abraham Maslow produced a theory of motivation based on studies into human behavior.

The Human Relations Approach to worker job design continues to address Maslow's theory of needs and picks up where the scientific approach leaves off. The emphasis on social groups improves production through increased employee output.

Frederick Herzberg, a major influence in modern motivation theory and creator of the Motivator-Hygiene theory. Herzberg suggests:

"The growth or motivator factors that are intrinsic to the job are: achievement, recognition for achievement, the work itself, responsibility and growth of advancement. The dissatisfaction-avoidance or hygiene. factors that are extrinsic to the job include: company policy and administration, supervision, interpersonal relationships, working conditions, salary, status and security". https: //www.business.com/articles/human-relations-management-theory/

Applying human relations' theories to today's conditions

Many of today's successful organizations have efficiently implemented teams and moved away from the larger normal working groups. Effective managers are more like leaders who facilitate a two-way channel between the upper and lower levels in the organization and managers more actively demonstrate interest in their teams through regular employee reviews and appraisals.

The business environment has changed significantly since the principles of Scientific Management were first implemented. The principles were successfully applied to large scale, labour heavy, manufacturing but this industry now produces shorter product lines with an ever changing variation of products. Also machinery now performs many of the tasks that used to be accomplished by the worker assembly line. It is possible that factory-based industries may benefit from the control and predictability of a standardized, procedure-based system but changes in legislation, worker rights and social influence all demand a more Human Relations Approach.

The principles of Scientific Management are outdated. This became evident in the 1980s when General Motors lost significant market share.

The Human Relations Approach to the design of work and management of people represents a significant improvement over work designed and managed according to the principles of Scientific Management.

System theories

Systems theorists consider that the most realistic view is to see an organization as a total system. Such a model includes inputs from the environment, the conversion or transformation of inputs to finished goods, and the output of those finished goods into the environment. This involves an interrelated set of elements functioning as a whole

Organization as organisms

General systems theory grew out of the organismic views of von Bertalanffy and other biologists; thus, many of the characteristics are relevant to the living organism (see picture number two). Picture number two allows to understand all the branches of organizations which according to this very theory are closely connected

This metaphor is a move from mechanic approach to more biological one. Therefore, organizations are considered as complex open systems which must adapt to grow and survive, otherwise, they die. Such organizations operate better when the needs are met.

Key Points are as follows:

1) Organizations are living systems, depending on their wider environment to meet their needs.

2) This metaphor is a move away from the Mechanistic view to a more Biological view.

3) Organizations are open systems and must adapt to grow and survive. If they do not adapt they will weaken and may die.

4) In certain environments, certain organizations tend to appear and thrive. e. g. Bureaucratic organizations function best in orderly, stable environments.

5) Organizations operate more efficiently when needs are met.

Limitations of the Organism Metaphor affect this theory quite strong. Although advantages and disadvantages still are able to compete in this case.

Strengths:

Develop understanding between organizations and their environments.

The management of organizations can often be improved through systematic attention to the “needs”

The focus on “needs” encourages to see organizations as interacting processes that have to be balanced internally as well as externally

In organizing there is always a range of options.

The metaphor stresses the virtue of organic forms of organization in the process of innovation

Weaknesses:

Product of changing times that has undermined the efficiency of bureaucratic organizations.

The metaphor leads to view organizations and their environments in a way that is far too concrete

It is misleading to suggest that organizations need to “adapt” to their environment or that environments “select" the organizations that are to survive

Interdependence where every element of the system works for all the other elements

In organizations, self-interest is a major conflict.

The danger of the metaphor becoming an ideology

Applying organism theory to today's conditions

Like organisms, businesses are born, grow and die.

Organisms are more receptive to environmental feedback than machines. Businesses also operate within a delicate ecology and other dependancies.

Entrepreneurial organizations grow more by evolution than rational planning. Perhaps businesses have both machine-like and organism-like characteristics which are controversial and opponent to each other, though.organisms look to their environments while being a machine encourages internal tinkering.

That means that this theory as a clearly self-outstanding structure doesn't almost exist, although it is now widely applied around the world. Every big corporation with highly developed branches and departments immediately is put under the definition of organization as an organism, however, management system still must contribute efforts to enabling structure and connection that bothers to work other not less applicable theories.

Socio-technical systems

It is not just job enlargement and enrichment which is important, but also transforming technology into a meaningful tool in the hands of the users. The socio-technical systems approach is based on the premise that every organization consists of the people, the technical system and the environment. Pasmore, 1988 People (the social system) use tools, techniques and knowledge (the technical system) to produce goods or services valued by consumers or users. Therefore, an equilibrium among the social system, the technical system and the environment is necessary to make the organization more effective.

There are four key variables which, it was suggested, were the major determinants of output:

people and social groups

technology

organizational structure

external environment

Sociotechnical Systems (STS) theory was initially developed by members of the Tavistock Institute in London, with the primary objective to improve the overall quality of working life. A sociotechnical system has two inter-related sub-systems (Mumford 2006):

the technology sub-system includes not only equipment, machines, tools and technology but also the work organization;

the social sub-system includes individuals and teams, and needs for coordination, control and boundary management.

Applying socio-technical approach to today's conditions

"The next significant step in improving workplace safety lies in looking beyond traditional approaches and exploring the potential of sociotechnical systems to address the fundamental challenges associated with new technologies, emerging industries and the ever-changing workforce (Dekker, Hancock, and Wilkin 2013; Holden et al. 2013; Carayon et al. 2014). This evolution will focus attention on latent or emerging risks as opposed to reacting to injuries after-the-fact. A number of relevant, yet disparate, theories and approaches can be drawn upon to understand worker safety within sociotechnical systems. Here, the focus of the theories and approaches is shifted to safety, though it is recognized that safety is an emergent property of the system and, as such, not separable from other system attributes and goals". https: //www.ncbi. nlm. nih.gov/pmc/articles/PMC4647652/

In the 50 years since sociotechnical systems theory was introduced it has evolved in many different ways. It has had a vital role to play in the never ending struggle to integrate the social and technical components of every working system. If it is to remain relevant and be developed further it now has to contribute to a world in which flexible, multifunctional information and communication technologies are being regularly implemented into existing operational work systems.

Contingency theories

The situational approach (Selznick, 1949; Burns and Stalker, 1961; Woodward, 1965; Lawrence and Lorsch, 1967) is based on the belief that there cannot be universal guidelines which are suitable for all situations.organizational systems are inter-related with the environment. The contingency approach (Hellriegel and Slocum, 1973) suggests that different environments require different organizational relationships for optimum effectiveness, taking into consideration various social, legal, political, technical and economic factors.

The essence of the contingency approach is that the manner in which an organization should be managed depends upon the wide range of variables which may apply to that organization at any point in time. "Contingency theory argues that organizational design, management and control structures should be tailored to fit the needs of individual organizations. Factors in organizational design will be dependent upon ownership, the environment, size, technology and the particular nature of the work". David Campbell, Tom Craig "Organizations and the business environment" [page 21]

Focus on determining the best management approach for any given situation.

Two types of environments: Stable (little to no change) and Innovative (great changes)

Two types of management systems: Mechanistic (similar to bureaucratic classical theory) and organic (non bureaucratic, similar to behavioral management)

In a stable environment, mechanistic works best, In an innovative environment organic works best

Burns and Stalker

Tom Burns and Graham Stalker in their 1961 book, "The Management of Innovation" studied about 20 Scottish and British electronics companies operating in increasingly competitive and innovative technological markets. Their findings demonstrated that organizations operating in stable environments are very different from those which have to face a changing and dynamic environment.

Burns and Stalker classified the firms into 2 categories on the basis of their managerial structures and practices: mechanistic and organic.

The authors found that mechanistic organizations, also called bureaucracies, are suited for relatively stable environmental conditions. The organic organizations are more likely to exist under unstable environmental conditions.

Burns and Stalker emphasized that each system is appropriate under its own specific conditions. Neither system was superior to the other under all situations.

Lawrence and Lorsch

Another significant study to demonstrate the relationships between environmental characteristics and effective organizational structures was conducted by Paul Lawrence and Jay Lorsch (1967). They studied ten US firms in three separate industries (plastics, food, containers) that confronted varying degrees of uncertainty, complexity and change.

The researchers found that successful firms in each industry had a different degree of differentiation. The firms operating in uncertain, complex, rapidly changing environments had more highly differentiated internal structures: sales, production and R&D departments. Such organizations require the greater need for suitable mechanisms for integrating and resolving conflicts between ranges of segments.

Successful firms in more homogeneous and stable environment were more formalized and hierarchical in their forms. Authors concluded that successful firms must have internal structures as complex as environments in which they operate

Differentiation

Differentiation refers to the degree to which management practices, attitudes and behavior vary (or differ) from manager to manager within the organization. In particular, the differences refer to:

the varying orientation to certain organizational goals (e. g. cost reduction is felt more keenly by accountants and production managers than sales people and engineers);

the varying time perspectives and time orientations (e. g. research and development (R&D) people tend to work on much longer time scales than sales and administrative people);

the varying degrees of interpersonal orientation (e. g. sales people tend to be more relationship oriented than production people);

the varying formality of functional department structures across the organization (e. g. production departments tend to have `taller' and more complex structures when compared to the relative informality of R&D departments).

Integration

"Integration refers to the degree to which management attitudes and practices are common among managers in an organization and the extent of collaboration that exists between managers. This is the opposite of differentiation". David Campbell, Tom Craig "Organizations and the business environment" [page 23]

Applying contingency theory to today's conditions

Contingency theory has many applications in the organizational world:

Can be used to assess the effectiveness of an individual in a particular role and look at the reasons for one's effectiveness or ineffectiveness.

Can be used to predict whether a person who has worked well in one position in an organization will be equally effective in another position having different situational variables when compared to the existing position based on the contingencies that make one's style effective.

Can help in implementing changes in the roles and responsibilities that management might need to make to bring effectiveness to the role of the person leading the same.

As now society has more understanding of leadership and its challenges in the XXI century organizational context, contingency model might not be the best leadership model to use in most situations, but still can be a powerful tool to analyze a particular situation to determine whether to focus on tasks or relationships. This model sometimes can give an inaccurate picture of your leadership style as it relies heavily on the LPC scale, which has been questioned for its face validity and workability.

Further this model does not fully explain how organizations can use the results of this theory in situational engineering and hence we recommend taking a cautious approach and using your own judgment to analyze the situation from all angles.

Conclusion

Classical theory, whilst used today appears limited in application. Human Relations theory is still useful when applied in terms of an organization's social dimension. A Systems theory whilst initially popular was overtaken by a more necessary flexible approach to management, gleaned from Contingency theory. This perspective took a pluralist view of organizations.

Organizations vary in terms of groups of individuals, industry type, structure, culture and objectives, making management differ within each entity. The trajectory of management theory, as time has progressed has added to the management debate and provided structure in which there is near agreement within groupings of schools who disagree vehemently as to the thinking of their adversaries.

Bibliography

1. David Campbell, Tom Craig "Organizations and the business environment"

2. Taylor F. New York: Norton; 1911. "The Principles of Scientific Management"

3. Von Bertalanffy L. New York, NY: G. Braziler; 1968. "General Systems Theory: Foundations, Development and Applications"

4. Lawrence, P. R., & Lorsch, J. W. 1967. "Differentiation and integration in complex organizations. Administrative Science" pages [1-47]

5. Weber, M. 1947. The Theory of Social and Economic Organization. Translated by Talcott Parsons. New York, NY: Free Press.

6. https: // www.ncbi. nlm. nih.gov/pmc/articles/PMC4647652/

7. https: // www.business.com/articles/human-relations-management-theory/

8. https: // www.brainyquote.com/quotes/authors/m/max_weber.html

9. http://www.uio. no/studier/emner/matnat/ifi/INF5890/v13/material-to-download/lecture-presentations/Feb_6_organization-and-management-theories/overview-of-theories-on-organizations-and-management-inf5890-v2013. pdf

10. http://www.economist.com/node/12762398

Размещено на Allbest.ru


Подобные документы

  • Discussion of organizational culture. The major theories of personality. Social perception, its elements and common barriers. Individual and organizational influences on ethical behavior. The psychophysiology of the stress response.

    контрольная работа [27,7 K], добавлен 19.11.2012

  • Investigation of the subjective approach in optimization of real business process. Software development of subject-oriented business process management systems, their modeling and perfection. Implementing subject approach, analysis of practical results.

    контрольная работа [18,6 K], добавлен 14.02.2016

  • Organizational legal form. Full-time workers and out of staff workers. SWOT analyze of the company. Ways of motivation of employees. The planned market share. Discount and advertizing. Potential buyers. Name and logo of the company, the Mission.

    курсовая работа [1,7 M], добавлен 15.06.2013

  • Analysis of the peculiarities of the mobile applications market. The specifics of the process of mobile application development. Systematization of the main project management methodologies. Decision of the problems of use of the classical methodologies.

    контрольная работа [1,4 M], добавлен 14.02.2016

  • The impact of management and leadership styles on strategic decisions. Creating a leadership strategy that supports organizational direction. Appropriate methods to review current leadership requirements. Plan for the development of future situations.

    курсовая работа [36,2 K], добавлен 20.05.2015

  • About cross-cultural management. Differences in cross-cultural management. Differences in methods of doing business. The globalization of the world economy and the role of cross-cultural relations. Cross-cultural issues in International Management.

    контрольная работа [156,7 K], добавлен 14.04.2014

  • Organizational structure of the company. Analysis of the external and internal environment. Assessment of the company's competitive strength. Company strategy proposal. Structure of implementation and creation of organizational structure of management.

    дипломная работа [2,7 M], добавлен 19.01.2023

  • Definition of management. The aim of all managers. Their levels: executives, mid-managers and supervisors. The content and value of basic components of management: planning, organizing, coordinating, staffing, directing, controlling and evaluating.

    презентация [414,2 K], добавлен 16.12.2014

  • The concept and features of bankruptcy. Methods prevent bankruptcy of Russian small businesses. General characteristics of crisis management. Calculating the probability of bankruptcy discriminant function in the example of "Kirov Plant "Mayak".

    курсовая работа [74,5 K], добавлен 18.05.2015

  • Types of the software for project management. The reasonability for usage of outsourcing in the implementation of information systems. The efficiency of outsourcing during the process of creating basic project plan of information system implementation.

    реферат [566,4 K], добавлен 14.02.2016

Работы в архивах красиво оформлены согласно требованиям ВУЗов и содержат рисунки, диаграммы, формулы и т.д.
PPT, PPTX и PDF-файлы представлены только в архивах.
Рекомендуем скачать работу.