The organizational theories analyze the internal structure and instill better relations between the various workforces. The economic theories deal mainly with the external factors such as production, distribution and consumption. The neoclassical theories study the purchase and supply decisions made in input and output market, supply and demand being the key issues. There are some aspects ignored by the above, such are covered by the Organizational theories. The resource based view is more concerned with the strategic development of an organization, rather than its structure and behavior. A newer concept of 'knowledge based view' extends the capabilities of former theories and eradicates the problems of key issues such as organizational learning, management of technology and managerial cognition. The major characteristics of the theory are transferability (the tactical and external knowledge eases communication, is a public good and ascertains their capabilities for sustainable development), capacity for aggregation (the resources should be added to the already assembled location contributing to the decision making of a firm),appropriability (the skill to generated revenue equal to the cost of production), specialization and knowledge requirements of production as all modern technologies are incarnations of abundant knowledge explored over the years. The existence of a firm depends on the Organizational knowledge which can be perceived in two ways - either by learning of its members, ingesting newer members or interposing newer technologies, and Wage structure which is set complex to infuse integration of various levels as a production team. The learning process follows routines (procedures, strategies and technologies) which direct the behavior of a firm. The specification of a production team needs to be tied together with rest of the firm to maximize performance, hence provide market stability by ensuring a long term relationship. The reason behind the existence of a firm is its avoidance to transaction cost. Utilization of specialists in an organization is a vital input to the production schema of an organization, their integration and coordination is an asset to a firm. The organizational theories focus on hierarchy as the basic structure following three types of coordination mechanisms - market, bureaucratic and clan ensuring better authority relations. The transfer of knowledge in form of technology etc is difficult between organizational members, hence emphasizes more on conversion of tactical to explicit knowledge. The transfer of knowledge does not ensure integration, thus coordination is measured or implied by the interdependence - pooled, sequential, reciprocal and team by rules, plans, mutual adjustment and group coordination respectively. Interdependence is not ridden by production instead is a component of organizational design. The above can be achieved by integration of specialized knowledge by four mechanisms - rules and directives (to govern behavior by set of guidelines for quality control), sequencing (minimizing communication and scheduling activities guided by a time pattern, it greatly affects inputs and production technology), routines (individual performance support and interaction between various levels of hierarchy) and group problem solving and decision making. It is very important to note the role of common knowledge which can be in form of language, symbolic communication, specialization, perception, reasoning and recognition of individual noesis. The internal structure of an organization entails hierarchy and location of decision making. Hierarchy can be described as a set of interrelated sub systems working simultaneously towards organizational development. It has been identified as the most successful means to solve the complex theory of organizational structure. It helps retain the individualistic capabilities which are furnished over the years ensuring promotion to the next higher level. Delayering is a newer concept which focuses on reduction of the hierarchical layers within the organization, thus enabling cost reduction and accelerating the decision making process. A team based organizational structure empowers employees by facilitating increased participation, thus providing motivational benefits to the members of an organization. The higher level integration or in other words, cross functional integration is a vertical structure where every member is an active participant; however size of such a group is restricted otherwise it would lead to miscommunication. The decision making is an important factor governing the futuristic approach of an organization. The Board of Directors who constitute the Senior Management are responsible for the implementations of a decision undertaken, since they are at the top of the hierarchy. The stockholders and employees also affect the decision making process. The idea of location of decision making depends on the type of situation i.e., if it deals with tactics (investment and strategic planning) then it should be decentralized otherwise it should be centralized in case of treasury or risk management. The firms are guarded by restrictions and boundaries such as integration which is not possible across different markets in which the organization operates. The vertical boundaries caused because of the miscommunication or inefficiency in transfer of newer technology provokes inconsistency and is difficult to eliminate. Thus the main point to consider is cooperation and reduction in conflict which can be achieved by acquiring newer technologies and managerial strategies. (Grant, 1996)
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The writer in the article has focused on the knowledge based theory of the firms instead of the Resource based theory because the latter focuses on the utilization of resources to maximize profit and increasing the resources for future with no specifications covered in terms of organizational structure and behavior; however knowledge based theory focuses on strategic management and learning, offering competitive advantage and coordination between the various levels of hierarchy. Further, it illustrates the structure and design, boundaries and welcomes innovative ideas. Since, the article mainly focuses on the Knowledge based theory of firms, it assumes or considers firms and organizations as conceptual which act as model to the business enterprises. According to the theory, a firm is an institution which shares knowledge and integrates various specializations into a team to enhance the productivity by using subtle inputs. It focuses on the existence of coordination, analyzing structure on the basis of hierarchy and location of decision making. Knowledge is considered to be transferable, aggregate, appropriate and specific. Such an approach conflicts with bureaucratic model of organization where hierarchy is supreme executing standardized procedures. It however promotes innovation and newer technologies required for future development. The article does mention the competitive approach which enhances profit but does not elaborate on it. It also does not clear upon external and internal factors affecting an organization. Some of the organizational structures such as functional and divisional structures have not been mentioned, but overall the articles cover all levels of organizational theory regarding its structure and design. (Organizational Theory and Design)
Relating the concepts of the Paper to the Organization
The organization i.e., "Ministry of Health - UAE" does follow a similar pattern in terms of structure followed. The Ministry is restructuring its sectors namely specialty, department and division. Such a distinction in sector reduces complexity in work arena by assigning specific work to the department or division of specific expertise. The ideas of the article on Knowledge theory which elaborates on the horizontal and vertical organizations and inclusion of newer technologies, thus procuring innovation are well covered in the project on Ministry of Health. The increase in the number of hospitals with better facilities laying focus on cost effectiveness and futuristic development has proved its uncanny success. The organization follows a set of predefined rules and procedures as elaborated in the article with a mission to promote nursing and legalize the profession. The integrity of the organization according to the article is marked when the various levels of hierarchy work in unison with proper communication and spreading the specific or specialized knowledge by recruiting newer employees. The hospitals follow a set of rules and procedures; also the HR Department is committed to hire new educated and better skilled nurses to meet the growing demand of human capital and technology, thus adding to the already aggregated resources. Newer campaigns such as 'Your Health Matters' promote the efforts of Ministry and their work to eradicate the health ailments. The Ministry simply does not focus on the resources but also on the organizational learning maintaining coordination between various levels of hierarchy. The Health teams comprise of nurses and specialists as described in the article, hence upgrades its utility. Thus, the concepts of article are relevant with the earlier module about the Ministry of Health - UAE.