Prof. dr hab. Kazimierz W. KRUPA
Wydział Ekonomii
Zakład Ekonomiki Inwestycji i Zarządzania Strategicznego
UNIWERSYTET RZESZOWSKI
35 601 Rzeszów
ul. Ćwiklińskiej 2
POLSKA
tel. 0 48 (17) 276 1347
kom. 694 519 013
mail: kkrupa@epf.pl
Organizations in Action.
Institutionalized organizations: formal
structure as myth and ceremony.
James Thompson in Organizations in Action emphasize the
fact that varieties of environmental
constraints: the elements constraints of task environment to which the
organization must adapt vary from organization to organization. They may also
change over time. Organizations turbulent global economy find their
environmental constraints located in the geographic space or in the social
composition of their task environments[1].
Geographic space: distance, costs of transportation/communication (tab. 1).
Table 1. Organizations find their environmental constraints located in
the geographic space or in the social composition
|
Geographic
space |
A/
distance, B/
costs of transportation, C/
costs of communication. |
|
Social
composition |
A/
individual members, B/
aggregates of individuals, C/
organizations. |
Source:
Own elaborate and J. Thompson Organizations
in Action, Handbook of
Organization, 2005, p. 8
Social
composition: individual members, aggregates of individuals, organizations. Task
environments:
·
hostile
or benign,
·
homogeneous
or heterogeneous,
·
stable
or rapidly shifting,
·
confined
or segmented,
·
stable,
or fluctuating.
Team Phadke speak, if orgnizational structure is an important means of achieving bounded rationality,
then the more difficult the environment, the more important it is to assign a
small portion of it to the core unit. Under norms of rationality, organizations
facing heterogeneous task environments seek to identify homogeneous segments
and establish structural units to deal with each. Under norms of rationality,
boundary spanning components facing homogeneous segments of the task
environment are further subdivided to match the surveillance capacity (data
collecting, win-win) with environmental action (Phadke, M.S.
(1989), Quality Engineering Using
Robust Design, Prentice hall, Englewood Cliff, NJ, pp. 67-75).
M. Kalsi impression the more
heterogeneous the task environment, the greater the constraints presented to
the organization (Kalsi M., Hacker K. Lewis K. A Comprehensive Robust Design
Approach for Decision Trade-Offs in Complex Systems Design. University at
Buffalo, 2007, pp. 345-377, kelewis@eng/buffalo.edu). The more dynamic
the task environment, the greater the contingencies presented to the
organization. Under either condition, the orgainization seeking to be rational
must put boundaries around the amount and scope of adaptation necessary, and it
does this by establishing structural units specialized to face a limited range
of contingencies within a
Table 2. Conditions vary - elements
|
These conditions vary as : |
1. Organization's task environment changes. 2. Innovations modify technologies. 3. The organization changes its domain and
hence its task environment. |
Source:
Own elaborate and J. Thompson Organizations
in Action, Handbook of
Organization, 2005, p. 8
limited
set of constraints. The more constraints and contingencies the organization
faces, the more its boundary - spanning component will be segmented (see Leesa-Ngunansuk
S., IT is the Answer to Crisis, Bangkok
Post, Thailand, February 11, 2009, p. D1 and Future before you plan,
[in:] R. A. Ritvo & A. G. Sargent (Eds.). The NTL Manager Handbook.
Arlington, VA: NTL Institute, pp. 267-289). Variations within organizations can
be accounted for as attempts to solve the problems of concerted action under
different conditions, such as techno and environmental constraints and
contingencies. These conditions vary as (tab. 2):
1.
Organization's
task environment changes.
2.
Innovations
modify technologies.
3.
The
organization changes its domain and hence its task environment.
S. Panchyshyn, M. Kubica and B. Bobk believe that a when technical core and boundary spanning activities can be isolated from one another except for scheduling, organizations under norms of rationality will be centralized with an overarching layer composed of functional divisions. Under conditions of complexity, when the major components of an organization are reciprocally interdependent, these components will be segmented and arranged in self-sufficient clusters, each cluster having its own domain (''decentralized division''). By identifying several separable domains and organizing its technical care and boundary spanning components in clusters around each domain, the organization attains a realistic bounded rationality. Organizations adapt their structures to handle constraints and contingencies (see Kubica M., METÓDY OHODNOCOVANIA V SR, [In:] PODNIKANIE A KONKURENCIESCHOPNOSŤ FIRIEM. Podhájska, 2008). Core arguments about structure:
1)
Organizations face the constraints inherent in their technologies and task
environments. Since these differ for various organizations, the basis for
structure differs and there is no ''one best way'' to structure complex
organizations.
2)
Within these constraints, complex organizations seek to minimize contingencies
and to handle necessary contingencies for local disposition. Since
contingencies arise in different ways for various organizations, there is a
variety of structural responses to contingency.
3)
Where contingencies are many, organizations seek to cluster capacities into
self-sufficient units, each equipped with the full array of resources necessary
for the organization to meet contingencies. i.e.: variables controlled by the
org. are subordinated to the constraints and contingencies it cannot escape.
The more its technology and task environment tend to tear it apart, the more
the organization must guard its integrity.
E.
Šúbertová speak, thus organizations GLOBAL NEW ECONOMY facing many contingencies
should exhibit quite rigorous control over those variable they do control (Šúbertová 2008). This helps to explain the paradox that the
total institution is so highly reutilized. There is a paradox in institutions
between the double requirement for standardization and flexibility (reconnect
guide in BOAO FORUM for ASIA).
E. Šúbertová
and M. Zeleny impressions
is that they try to make things like an organization's relation with the environment
and persistence of structural features in an industry into some kind of cosmic
enigma[2].
And don't say the word ''efficiency'' to them - because performance apparently
has nothing to do with an organization's adoption of institutionalized
standards (Eco Native). Rowan and Meyer speak, for instance, try to make
institutional conformity into some kind of shell game that has to do with
institutional myths and organizations where the formal structure doesn't have
anything to do with its practical activities. They bring up this last bit a
number to times, but like most of the article this is real vague and I still
don't have any idea about what they are trying to say. So, in short, I think
this article is basically crap - probably the stupidest thing I have read thus
far for the prelims (and keep in mind that I had to read Civilization and Its
Discontents - and I “hate” Freud). Rowan and Meyer basically don't have
anything to say (at least not anything important) and try to hide that fact by
wallowing in a bunch of vague language. This summary is much longer than it
deserves to be, but I tries to take the parts below pretty directly from the
article in case someone can find out if they are actually saying anything.
Formal organizations are typically understood to be systems of coordinated and
controlled activities that arise when work is embedded in complex networks of
technical relations and boundary-spanning exchanges. But in modern societies,
formal organizational structures arise in highly institutional contexts.
Organizations Digital Economy are driven to incorporate the
practices and procedures defined by prevailing rationalized concepts of
organizational work and institutionalized in society. Organizations that do so
increase their legitimacy and their survival prospects, independent of the
immediate efficacy of the acquired practices and procedures. There can develop
a tension between on the one hand, the institutionalized products, services,
techniques, policies, and programs that function as myths (and may be
ceremonially adopted), and efficiency criteria on the other hand. To maintain
ceremonial conformity, organizations that reflect institutional rules tend to
buffer their formal structures from the uncertainties of the technical
activities by developing a loose coupling between their formal structures and
actual work activities.
Team
Accura and M. Tóth believe that a distinction should be made between the formal
structure of an organization and its actual day-to-day work activities (Tóth 2008). They see a problem
in that prevailing theories of formal structure assume that the coordination
and control of activity are the critical dimensions on which formal
organizations have succeeded in the modern world. J. Meyer and B. Rowan (not to be confused with Rowan and Martin
of ''Laugh In'' fame) believe that there is a need for an explanation of the
rise of formal organizations that is partially free from the assumption that,
in practice, formal structures actually coordinate and control work. Š.
Majtán and B. Rowan believe that fitting attention to the role
of legitimacy of rationalized formal structures is woefully missing from
prevailing theories of organization [Majtán
2008]. In modern society, the myths generating formal organizational structure
have two key properties:
1)
They are rationalized and impersonal prescriptions that identify various social
purposes as technical ones and specify in a rule-like way the appropriate means
to pursue them rationally.
2) They are highly institutionalized and thus in some measure beyond the
discretion of any individual participant or organization. They must be taken
for granted as legitimate.
Alistar Cockburn count
professions, technology, and programs among the many elements of formal
structure that function as myths[3].
These myths make formal organizations both easier to create and more necessary
(fig. 1). Since these building blocks are considered proper, adequate,
rational, and necessary, organizations must incorporate them to avoid
illegitimacy (fig. 2):
Figure 1. Myths make formal
organizations - building blocks are considered
Source:
Own elaborate and J. Meyer and B. Rowan,
Institutionalized Organizations: Formal Structure as Myth and
Ceremony, 2005, p. 5
1.
As
rational institutional rules arise in given domains of work activity, formal organizations form and
expand by incorporating these rules as structural elements. Implied here are:
1): as institutional myths define new domains
of rationalized activity, formal organizations emerge in these domains,
2): as rationalizing institutional myths arise
in existing domains of activity, extant organizations expand their formal
structures to become isomorphic with these new myths[4].
Figure 2. Organizations
must incorporate them to avoid illegitimacy
Source:
Own elaborate and J. Meyer and B. Rowan,
Institutionalized Organizations: Formal Structure as Myth and
Ceremony, 2005, p. 5
2. The more modernized the society, the more extended the rationalized
institutional structure in given domains and the greater the number of domains
containing rationalized institutions.
M. Kubica, Delphi Group and Ch. Alexander[5] emphasize the fact that organizations are
structured by phenomena in their environments and tend to become isomorphic
with them. One account (the one by bad prevailing theorists) says that this is
comes about through technical and exchange interdependencies - ie.
boundary-spanning exigencies. The second (good) account says that organizations
structurally reflect socially constructed reality in a broad sense not captured
by the bad theorists. J. Tej say that a real discussion is beyond the
scope of this reading, but they do cite three processes as generating
rationalized myths of organizational structure[6]
(tab. 3):
Table 3. Three processes as generating rationalized myths of
organizational structure
|
Steps processes as generating rationalized myths of organizational structure |
1.
Elaboration of complex relational networks |
|
2.
Degree of collective organization of the environment |
|
|
3.
Leadership efforts of local organizations |
Source:
Own elaborate and J. Meyer and B. Rowan,
Institutionalized Organizations: Formal Structure as Myth and
Ceremony, 2005, p. 4
a/
Elaboration of complex relational networks,
b/
Degree of collective organization of the environment - I think this has
something to do with mandate legitimacy of certain myths,
c/
Leadership efforts of local organizations.
Efforts
to mold institutional environments proceed along two dimensions:
- powerful organizations force their immediate relational networks to adapt to
their structures and relations.
-
powerful organizations attempt to build their goals and procedures directly
into society as institutional rules.
Isomorphism
with environmental institutions has some crucial consequences for organizations
(tab. 4):
a)
they incorporate elements which are legitimated externally, rather than in
terms of efficiency;
b)
they employ external or ceremonial assessment criteria to define the value of
structural elements;
c)
dependence on externally fixed institutions reduces turbulence (buffers the
organization) and maintains stability. As argued by J. Meyer and B. Rowan,
institutional isomorphism promotes the success and survival of organizations.
Table 4. Isomorphism with environmental institutions - consequences
|
Isomorphism Three consequences for organizations |
They
incorporate elements which are legitimated externally, rather than in terms
of efficiency |
|
They
employ external or ceremonial assessment criteria to define the value of
structural elements |
|
|
Dependence
on externally fixed institutions reduces turbulence (buffers the
organization) and maintains stability |
Source:
Own elaborate and J. Meyer and B. Rowan,
Institutionalized Organizations: Formal Structure as Myth and
Ceremony, 2005, p. 4
2.
2.
Organizations that
incorporate societally legitimated rationalized elements in their formal
structures new economy maximize their legitimacy and increase their resources
and survival capabilities (Daniel Mankani (2007), Technopreneurship: The Successful
Entrepreneur in the New Economy. Pearson Education Asia, pp. 336-358). The survival or some organizations depends
more on managing the demands of internal and boundary-spanning relations (like
the bad theorists say), while others depend more on the ceremonial demands of
highly institutionalized environments (like new institutionalism says).
2.
Figure 3.
Four partial solutions to the inconsistencies facing institutionalized
organizations
Source:
Own elaborate and J. Meyer and B. Rowan,
Institutionalized Organizations: Formal Structure as Myth and
Ceremony, 2005, p. 7
In
the case of the latter, the uncertainties of unpredictable technical
contingencies or of adapting to environmental change cannot be resolved on the
basis of efficiency, so internal participants and external constituents alike
call for institutionalized rules that promote trust and confidence in outputs
and buffer organizations from failure.
R. Stefko[7]
impression, organizations whose success depend primarily on isomorphism with
institutionalized rules are confronted with two general problems:
1.
Technical
activities and demands for efficiency can conflict with efforts to conform to
ceremonial rules of production.
2.
Ceremonial
rules transmitted by myths originating from different parts of the environment
may conflict with each other.
Madhav S. Phadke
believe that a ceremonial activity is significant in relation to
categorical rules, not in its concrete effects. Activity that has ritual
significance, therefore, maintains appearances and validates an organization.
These categorical rules conflict with the logic of efficiency. This is, in
part, because institutional rules are couched at high levels of generalization,
whereas technical activities vary with specific, unstandardized, and possibly
unique conditions (Madhav S. Phadke Introduction To Robust Design
(Taguchi Method). iSixSigma
LLC, pp. 345-378). There are four partial solutions to the
inconsistencies facing institutionalized organizations (fig. 3):
1.
The
organization can resist ceremonial requirements (although such a practice could
result in an inability to document/portray its efficiency).
2.
The
organization can maintain rigid conformity to institutionalized prescriptions
by cutting off external relations.
3.
The
organization can cynically acknowledge that its structure is inconsistent with
work requirements (although I still have no idea what J. Meyer and B.
Rowan mean when they say this).
4.
The
organization can promise reform.
4. Because attempts to control and coordinate activities in
institutionalized organizations turbulent global economy lead to conflicts and
loss of legitimacy, elements of structure are decoupled from activities and
from each other. This make take the form of: encouraging professionalism,
making goals ambiguous or vacuous (i.e. categorical rather than technical),
avoiding integration, or emphasizing human relations. Decoupling enables
organizations to maintain standardized, legitimating, formal structures while
their activities vary in response to practical consideration.
5. The more an organization's structure is derived from institutionalized myths, the
more it maintains elaborate displays of confidence, satisfaction, and good
faith, internally and externally. Confidence and good faith allow the
organizations to appear useful in spite of lack of technical validation. Taking
off from Goffman, they say the considerations of face characterize ceremonial
management. Confidence in structural elements is maintained through three
practices - avoidance, discretion, and overlooking. Participants not only
commit themselves to supporting an organization's ceremonial facade, but also
commit themselves to making things work out backstage through informal
coordination[8].
6.
Institutionalized organizations seek to minimize inspection and evaluation by both internal managers
and external constituents, both of which could uncover conditions that
undermine legitimacy and ceremonial aspects of the organization[9]
(see Yao X., Darwen P. (1994), An
Experimental Study of N-person Prisoner’s Dilemma Games, London, pp. 24-56
and Bennhold K., The Financial Collapse?
Maybe it’s a guy Thing, International Herald Tribune, February 2, 2009, p. 15).
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