Determinants
of organizational structure
dr. hab. Jerzy Supernat
Institute of Administrative Studies
University of Wrocław
Determinants of organizational structure
Organizational structure is neither random
nor accidental: it is a consequence
of the simultaneous impact of many
determinants (conditions/factors).
A search for a single or primary cause of
organizational form is doomed to failure.
Fundamental
determinants:
context (situation in which
an organization operates)

design (organizational
actions in regard to structure;
decisions made
in an organization about how
the organization is
to be structured)

Determinants of organizational structure
Contextual determinants

internal




organizational size
technology
organizational culture/climate
external


environment
national culture
dr. hab. Jerzy Supernat
Determinants of organizational structure
Organizational design
strategic choice (designing a structure by the
organization itself)

institutional isomorphism (making use of
already existing organizational forms)

dr. hab. Jerzy Supernat
Determinants of organizational structure
Size of an organization




the number of people in an organization
the physical capacity of an organization
organizational inputs and outputs
financial resources
dr. hab. Jerzy Supernat
Determinants of organizational structure
Technology
Technology involves acting on and/or
changing an object („raw material”)
from one state to another. The object can be a living object (a living
being: human or otherwise), a symbol, or an inanimate object.
People are raw materials in people-changing or peopleprocessing organizations. Symbols are raw materials in
banks, advertising agencies and some research organizations.
dr. hab. Jerzy Supernat
Determinants of organizational structure
Types of technology (based mainly on research by Joan
Woodward, 1916-1971):
•
•
•
•
•
project technology
jobbing/unit/one-off technology
batch technology
 small-batch technology
 large-batch technology
line/mass production technology
continuous-process technology
J. Woodward, Industrial Organization: Theory and Practice, Oxford University
Press 1965:
Many of the variations found in the organizational structure of the firms
studied did […] appear to be closely linked with differences in manufacturing
techniques. Different technologies imposed different kinds of demands on
individuals and organizations, and these demands had to be met through an
appropriate structure.
dr. hab. Jerzy Supernat
Determinants of organizational structure
Organizational culture
The importance of the organizational culture factor has
received varying degrees of attention by organizational
scholars and practitioners. It received prominence in 1938
in Chester I. Barnard’s important analysis of the functions
of the executive.
C.I. Barnard: one of the main functions of the executive is
to set the tone for the entire organization.
The emphasis returned with a vengeance in the 1980s as organizations
sought a culture of „excellence” underlying the importance of the following
attributes: 1) a bias for action, 2) close to the customer, 3) autonomy and
entrepreneurship, 4) productivity through people, 5) hands-on, value driven,
6) stick to the knitting, 7) simple form, lean staff, 8) simultaneous loose-tight
properties.
dr. hab. Jerzy Supernat
Kontekstowe uwarunkowania struktury organizacyjnej
Chester I. Barnard
(1886-1961)
dr hab. Jerzy Supernat
Determinants of organizational structure
Organizational culture – definition
Linda Smircich (born 1948):
Organizational culture „is a possession – a fairly stable set
of taken-for-granted assumptions, shared meanings, and
values that form a kind of backdrop for action”
Culture can also include strong ideologies, and strong
ideologies make an organization conservative, since decisions and actions are made within a particular ideological framework.
dr. hab. Jerzy Supernat
Determinants of organizational structure
Organizational culture – definition
Edgar H. Schein (born 1928):
A pattern of shared basic assumptions that the group learned as it
solved its problems of external adaptation and internal integration,
that has worked well enough to be considered valid and, therefore, to
be taught to new members as a correct way to perceive, think and
feel in relation to those problems
dr. hab. Jerzy Supernat
Determinants of organizational structure
Problems related to external adaptation concern views of
an organization’s tasks and objectives as well as the
means to implement and assess them. A solution has to
be found for them so that the organization can function
and succeed in its environment.
Problems related to internal integration concern the creation of a common language and concepts, defining group
limits, the level of authority relationships and interaction,
as well as methods of reward and punishment. A solution
has to be found for these so that members of the
organization can function together in an organized and
predictable working community.
dr. hab. Jerzy Supernat
Determinants of organizational structure
Environment
Of primary interest is the social environment of an organization, but the physical environment (e.g. climate or geography)
can also be important, particularly for the organization that
utilizes or affects that physical environment.
One way of looking at environments is to
determine whether they are friendly or hostile.
For the most part in a friendly environment
organizations will be structurally differentiated.
If the environment turns hostile, the organization
will tighten up by centralizing and standardizing
its operations.
Determinants of organizational structure
PEST analysis – analysis of a general (indirect) environment of the
organization, usually taking into account four dimensions:
•
Political-legal
•
Economic
•
Sociocultural
•
Technological
Government regulations.
E.g. general economic growth, inflation, interest rates, and unemployment.
The customs, mores, values, and demographic characteristics of the society.
The methods available for converting inputs into products or services.
Pest: 1. An annoying person or thing; a nuisance. 2. An injurious
plant or animal, especially one harmful to humans. 3. A deadly
epidemic disease; a pestilence.
Show me a friend in need and I’ll show you a pest.
dr. hab. Jerzy Supernat
Determinants of organizational structure
National culture
 the national culture is the main factor determining organizational culture – culture bound view
 organizational characteristics are based on
factors other than the national culture – culture
free view
Samurai of the Satsuma Clan, circa 1867.
dr. hab. Jerzy Supernat
Determinants of organizational structure
National culture and
organizational culture
overlap.
For some issues (e.g. dealing
with authority) national culture is
most important, whilst for other
issues (such as dealing with
innovations) the organizational
culture is more important.
An analysis of Japanese
companies located in the United
States by William G. Ouchi and
Alfred M. Jaeger, has found the
following general differences
between Japanese and American
firms:
American organization
Japanese organization
1.
Short-term employment.
1. Lifetime employment.
2.
Individual decision
2. Consensual decision
making.
making.
3.
Individual responsibility.
3. Collective responsibility.
4.
Rapid evaluation and
4. Slow evaluation and
promotion.
5.
6.
promotion.
Explicit, formalized
5. Implicit, informal control.
control.
6. Nonspecialized career
Specialized career path.
path.
The Japanese firms with operations in the US resembled the Japanese
model more than the American model which suggests that the country
of origin is of critical importance.
William G. Ouchi
Alfred M. Jaeger
Determinants of organizational structure
Strategic choice
Organizations make
strategic choices in regard
to how they are structured.
The importance
of strategic decisions
concerning
an organizational structure
emphasized Alfred D.
Chandler.
According to A.D.
Chandler’s famous
statement:
structure follows strategy.
Projektowe uwarunkowania struktury organizacyjnej
Alfred D. Chandler
(1918-2007)
dr hab. Jerzy Supernat
Determinants of organizational structure
Strategic choices are made on the basis of bounded rationality. The
idea of bounded rationality by Nobel laureate Herbert A. Simon (19162001) means that the strategic choices are not necessarily the optimal
choices. Nevertheless the concept of equifinality (the presence of
several means available to reach a given end/goal) stresses that
decisions and decision making are important.
Ludwig von Bertalanffy (1901-1972):
In any closed system, the final state is unequivocally determined by
the initial conditions: e.g. the motion in a planetary system where the
positions of the planets at a time t are unequivocally determined by
their positions at a time t°. This is not so in open systems. Here, the
same final state may be reached from different initial conditions and
in different ways. This is what is called equifinality.
dr. hab. Jerzy Supernat
Projektowe uwarunkowania struktury organizacyjnej
Herbert A. Simon
dr hab. Jerzy Supernat
Determinants of organizational structure
In concrete example an organization faces the
choice between:

outsourcing (outside resource using)

insourcing (inside resource using)
dr. hab. Jerzy Supernat
Projektowe uwarunkowania struktury organizacyjnej
Model T
Year 1915
dr hab. Jerzy Supernat
Projektowe uwarunkowania struktury organizacyjnej
Model T
dr hab. Jerzy Supernat
Projektowe uwarunkowania struktury organizacyjnej
Henry Ford
next to his Model T in 1921.
dr hab. Jerzy Supernat
Determinants of organizational structure
Institutional isomorphism
Organizations exist in fields of other, similar organizations.
Paul J. DiMaggio, Walter W. Powell:
[…] By organizational field, we mean those organizations
that, in the aggregate, constitute a recognized area of institutional life: key suppliers, resource and product consumers, regulatory agencies and other organizations that
produce similar services and products. The virtue of this
unit of analysis is that it directs our attention […] to the
totality of relevant actors.
According to this perspective organizations are becoming
increasingly homogeneous within organizational fields.
dr. hab. Jerzy Supernat
Projektowe uwarunkowania struktury organizacyjnej
Paul J. DiMaggio
Walter W. Powell
dr hab. Jerzy Supernat
Determinants of organizational structure
Types of institutional isomorphism
coercive isomorphism (there are coercive forces from
the environment, such as government regulations and
cultural expectations, which impose standardization on
organizations)

mimetic isomorphism (organizations mimic or model
each other)

normative isomorphism (takes place as the workforce,
and especially management, becomes more professionalized)

dr. hab. Jerzy Supernat
Influence of different factors makes that an organizational
structure takes different forms and is dynamic. Nevertheless one
shouldn’t forget that an organizational structure is for a purpose
and that the purpose is to be as effective as possible.
Concluding remark
The achievements of an organization are the
results of the combined effort of each individual.
Vince Lombardi (1913-1970)
dr. hab. Jerzy Supernat