Theories On Organisational Analysis And Design Business Essay


In any organisation management set up the certain rules and regulation for the smooth growth of the business in the corporate world. This is purely based on how they build the structure of their organisation and how they design it. In all organisations there should always be a structure which is followed by the employees and the management. The structure can be of any type. It may be rational, bureaucratic, and institutional or it may be contingent. Actually, the structural design of the organisation depends on the organisational type most of the time. If you are in a high tech business, you might follow the rational structure or the contingent structure and if you are in a large business corporation, you might follow the bureaucratic structure. Therefore, it always depends on the characteristics of the organisation and reflects in the particular organisation design.

The complexity and diversity of power sources has become a widely studied phenomenon in the area of organisational development & change (Buchanan & Badham, 1999; Klein 1998). "Business strategy has been discussed from many differing perspectives. A common and useful conceptualisation put forward by Miles and Snow 4 focuses on a firms' strategic

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environmental adaptation or aggressiveness towards the market. Much research over the

years has investigated differences among the four strategic types regarding a variety of internal factors, including innovation, management characteristics, organisational performance, and organisational design. The outlined Defender, Analyser, Reactor, and Prospector firms are suggested to be distinct in their actions, with each strategic group enacting consistent decisions and activities across a variety of organisational areas" (Pleshko, 2006). The role of employees as important nerve centers in turn promotes a sense of involvement resulting in more commitment, flexibility and innovation (Spekman et al., 2002; Beech and Origin, 2003).

Theories of OAD

The structure of an organisation is actually conceptualized by some of the organisational theories. Different organisation uses the different theories to get the best outcomes. It is always necessary that any business should work ethically towards its people and the society. While designing the structure of the organisation the management should always keep these things in mind. The concept of OAD can be applied differently in the organisational structure. It talks about the main four concepts of the organisational theories which are described as below:

Organisational Rationality: The organisational rationality theory actually explains the roles and responsibilities of the employees in the different framework. It consists of the real designed structure of the organisation. This theory can be used as to get the best outcomes from the operations and also thinking towards the positive prospective of an organisation. With the addition of technical mediation and commercialism, games become the basis for the production of a form of "institutional order" analyzable on terms similar to those employed in the study of other systems of social rationality (Weber, 1958; Henricks, 2006).

As the dominant organizing system of an increasing proportion of our everyday life experience, production easily becomes a prominent focal point in discussions of play andmodernity (Gruneau, 1999). For as play activities become more "organized, even administered" (Marcuse, 1965, p. 32), they are increasingly structured by the same values, priorities, skills, and norms that drive the workday (Mills, 1956; Bourdieu, 1978). The base of rationality includes the theories of decision making which contains the satisfactory decision making and incremental decision making. The theory of organisational rationality affects different organisations according to their characteristics. The application of this might be different for a high tech business rather than the large business corporation.

Bureaucratic Organisation: The bureaucratic organisational theory is widely used by the complex organisations. Mostly the public and private sectors are using this approach and it acts in a similar way in both type of the organisation. In other words, bureaucratic organisation is known as the modern theory of the organisational concept. It is simply includes the standard form of rules and the different characteristic of its theory. The bureaucracy as ideally defined by Weber (1946) is based on organising principles of specialisation of expertise, meritocracy, and instrumental rationality.

The organisation with the bureaucratic approach has always been dominant in the market. There are different four things which rationalise the bureaucratic approach. It can be defined as the rational structure of the roles of different employees, hierarchy of responsibility and authority, the standard rules and ethics of the organisation. This style has been very popular in Europe, Germany and France. This theory is most likely the freedom to employees because the power to make decision is defined by the formal rules not by the management. The formal rules are specified very distinctly to the employees in terms of their rights, duties and responsibilities. The emotions are totally neglected in this structure. The researchers have compared the bureaucratic structure with the Iron Cage. It is very interesting exercise to learn the bureaucratic approach of the organisation.

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Institutional Theory: The institutional approach to the organisation structure is more likely to follow the structure of the co-industry or the similar industry. The institutionalism has overcome the concept of the bureaucracy. It follows the master concept or applies the legitimate rules to the organisation. This theory has been quite useful to the newly developed organisation because it simply has to follow the standard design. That makes quite easy for the organisation and the simple theory can be applied to get the best outcomes. The two different concepts are mainly used by the organisation in this theory; it can be either normative approach or can be the coercive approach. Is actually depends on the organisational characteristics and its structure. Sometimes, the organisations are ruled by the legislation and the laws. The same approach has been followed by all the industries in the same profession. Institutional theory suggests that organisations are both influenced by and can influence the society in which they operate (Meyer and Rowan, 1977; Meyer and Scott, 1992; DiMaggio and Powell, 1983, 1991).

From an institutional point of view, it has been suggested that organisations may change and adopt the norms of society to appear legitimate to that society (DiMaggio and Powell, 1983, 1991; Meyer and Rowan, 1977). This makes easy for the organisation and it can find out what is proper and correct. The Harvard business school is the best example of the institutionalism, as most of the business school has accepted the Harvard style. This theory might work against the ethical posture of an organsaition because the same design, strategy and innovations have been accepted by the industry.

Contingency Theory: The contingency theory can be known as the dominant theory as well. This theory explains that not all the things in organisation that the management can use or apply some things are unavoidable in the organisation. That is why the theory of contingency can be applied to remove the irrationality. It becomes necessary for the management to deal with the unavoidable issues and this theory really helps the organisation to improve the plan and structure. The application of this theory directly reflects to the organisational characteristics. If the environment is stable, the organisation go for the bureaucratic approach but if it's a purely technology based firm than it might chose the contingency theory concept. This theory also suggests that the organisations with the same technology are quite similar in the size as well.

This theory also suggests that the organisational can still legitimate the laws by applying the contingency approach. The changing and unstable environment structure will shape the contingency with the organic bureaucracy. Acknowledging that philanthropy may have a direct influence on consumer behaviour, such as ties with the store and patronage loyalty, this study also investigates it from a contingent perspective using the strategy environment coahgnment paradigm (eg Aldrich, 1979; Chandler, 1962).

Critiques of Organisational Theories

Organisational Rationality: In the organisation, management can make the rational decisions but there is always some irrationality that relates to the decision making theory. On this theory the critics say that what we know, we can't actually apply it practically. "Critical theory offers a unique entry point in this regard, one that integrates and expands upon Marx's critique of capitalism and Weber's critique of rationality. By situating technologies within the social, institutional, and ideological contexts from which they are born and within which they evolve, critical theory addresses both the symbiotic relationships that exist between the technical and the social, and the specific threat of technocracy in modern societies. In this way, critical theory allows for a deeper consideration of the ways in which games serve multiple functions for both their owners and players" (Grimes and Feenberg, 2009).

The management plans to undertake the operations through the rationality but actually it might involve the implementation of decision through the incremental process. Before making the rational decisions organisation should always know that what are the main characteristics of the formal structure. Sometimes in rationality, the entities may change frequently with the static or dynamic structure.

Bureaucracy: The critics view bureaucracy as heartless and cruel. Because it does not involve the real assets of the organisation. Bureaucracy is totally regardless to employees and its management. It is focused only on the standard and rules of an organisation and completely adheres to them. It also neglects the identities of an individual in an organisation.

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"Since the early critics on bureaucratic modes of governance and functioning, much has been said about the demise of bureaucracy and the uncoercible emergence of post-bureaucratic alternative forms of management. According to the post-bureaucratic defenders, bureaucracy would have proven its inability to cope with more decentralized contexts of action, with more requesting and individualistic employees, and, not the least, with changing beliefs about power and managerial sovereignty within the workplace" (Courpasson, Paul, Lyon).

Institutionalism: The institutional theory has been criticized on two different normative and coercive isomorphism. This theory uses the regular norms which are best in practices. The different organisational characteristics approached the institutionalism differently. The critics explain it as the mimic of the one industry by the similar organisations. Sometimes it legislate the organisational environment.

There is the view that many public sector entities are currently undergoing significant reforms, not to achieve greater economic efficiency but for the purpose of legitimising themselves to different forms of institutional pressure or influence (Broadbent and Guthrie, 1992; Lapsley, 1999; Hoque et al., 2004). This theory raises the question against the ethics of an organization. Because sometimes it happens that in following the co-industry actions, it might be possible that the organisation copy the new innovations or adopted the same strategy. The organisational always have to be dependent on the global changes. In the concocted organisation, the management cannot create the rational designs. The critics also talk about the designs and asked that how it can be transferred from one location to another. The question about the theory is that how it affects to the different countries and the organisation that differs with the characteristics.

Contingency: The critics raise the question about the contingency theory is that how it will shape the organisational structure in terms of its design. The main three factors of the contingency theory criticised on its implications. If the environment is changing, if it's stable or if it's unpredictable, the implications of contingency theory would be different in all cases. However the daily techniques used in the organisation shaped the organisation design differently. The new management orientation is also embracing innovation as a key ingredient of success and competitiveness (Khalil, 2000; Liyanage and Poon, 2002).

Fostering learning in organizations has simultaneously emerged as a critical challenge for managers given the focal role it plays in allowing the human capacity for innovation and creativity to flourish (Porth et al., 1999). The contingency theory also involves the functions of an organisation because every department has the different role in an organisation. This will rapidly change the organisation structure in a different manner.

Corporate Social Responsibility

To design the ethics in a business organisation is the part of its structure. While designing the organisational structure, it has to understand the importance of ethic in business environment. The ethics are indirectly the fundamental principles of an organisation. If the organisation simply follows the legislation does not mean that the organisation is working ethically. Throughout the literature, it is generally agreed that corporate social responsibility is vital for business survival and success (Trapp, 2009). Sometimes the ethics relates to the advertising campaigns of an organisation. It does not actually means what it is marketing. The issues related to the strategic choices and ethics and the analysis of those issues defines the corporate social responsibility. The CSR generally includes the sustainable development of an organisation. It has the commitment towards economic, social and environmental responsibilities.

When the business does not response to its social responsibility it might be create the risk for the society. The limited body of research on CSR in emerging economies has focused almost exclusively on corporate citizenship, corporate irresponsibility, and motives for CSR in these countries (Blowfield and Frynas, 2005; Frynas, 2005; Pedersen and Huniche, 2006). Given that firms in emerging economies are embedded in different business systems from those of western firms, research on the association between CSR and organisational performance in emerging economies is warranted (Aguilera et al., 2007; Campbell, 2006).

Significant efforts have been made to understand the impact of CSR activities on organisational performance (Griffin and Mahon, 1997; Husted and Allen, 2000; Husted and Salazar, 2006; Marom, 2006; McWilliams and Siegel, 2001; Moneva et al., 2007; Orlitzky et al., 2003; Salzman et al., 2005; Schuler and Cording, 2006; Swanson, 1995, 1999; Waddock and Graves, 1997; Windsor, 2001; Wood, 1991; Wood and Jones, 1995; Wright and Ferris, 1997). Pava and Krausz's (1995) comprehensive review of empirical studies of the relationship between CSR and organisational performance found that, overall, firms perceived as having met social responsibility criteria have either outperformed or performed as well as other firms that are not necessarily socially responsible.

Such positive relationship has also been supported by a recent meta-analysis of the relationship between CSR and organisational performance (Orlitzky et al., 2003). A number of arguments and rationales have been advanced as to why CSR has a positive impact on financial performance (Allouche and Laroche, 2006). Foo (2007) argued that CSR puts social constraints on firms that may be in conflict with the pursuit of financial gains. The social responsibility of a business will create the environment of acceptable behaviours by the society. The corporate social responsibility helps the organisation to increase its image rating and reputation in the market. The organisation which has the good image in the market will get the bank loan easily with a low interest rate. The CSR also defines the code of conduct and the moral responsibility of an organisation. The organisation can actually implement the ethics and it can also compare them.

Organisational Structure

The concepts of OAD focus on the different organisational structure. However the organisational structure is mainly shaped by its characteristics. The theories of OAD show that how it applies to the organisation and shape its structure. The existence of an organisation is defined by its functions and those practices which can be applied practically. The functional structure of an organisation shows its efficiency by the different forms and its survival ratio in the market. The environmental structure of an organisation can be stable, unstable, fast changing or rapidly changing. The uncertain business environment affects the profitability and the growth of the business. As, the business environment changes, the characteristics of an organisation will be changed and because that the significant changes will take place in organisation. The functional structure of an organisation includes the R & D dept., marketing dept., production dept., financial dept. and the HR department. The organisational structure is finally the combination of the functions of these different five departments.

Mintzberg (1981) has introduced the five different organisational designs to accomplish the organisation targets. The simple structure includes the top management, few middle managers and the task force. The machine bureaucracy structure characterised its emphasis on standardised and specialized staff. The professional bureaucracy's structure relies on the employees skills not on the organisation process. The divisionalised form uses the different expert units called divisions. Each division has the expertise business products. The adhocracy structure implement to organisation in which project teams highly required. Mintzberg structures have the rationale relationship between theories and business environment.

"Senior managers had more access to knowledge and information about the organisation and its resources than their subordinates. Thus, one of the main ways in which the organisational structure shaped access to information was through the attitude and behaviour of line managers" (Ashton, 2004). Sometimes the organisation uses the matrix structure for temporary projects and to achieve the high performance. There is another structure that can also be applied to the organisational behaviour which is known as the Hybrid structure.

Organisational Structure in a high-tech business:

Organisation name: "Angel Corporation"

Angel Corporation is a newly started high tech business. This high tech business is developing the different softwares and selling them in the market. This is purely a technology based organisation. To design the structure of this kind of organisation the contingency theory will fit best into it. The angel corporation can apply the theory and concept of the other software industries by using contingencies structure. Because this theory applies with the organisations which are similar in size as well as in technology.

Organisational theories in action

1. Rationalism: To apply the rationality in the organisation, the angel corporation has to create certain rules and regulations. There should be a standard of formal rules, which are followed by the employees and the management. The rationalism theory helps the corporation to make the satisfactory decision making. Because of the application of rationalism theory, the organisation will run and grow smoothly. The rationality itself forms the standard procedure and makes the management efficient.

2. Bureaucracy: By the application of the bureaucracy theory in a high tech business, the roles and responsibility of the employees define by the formal rules. There is no involvement of management in the organisational decision making. The employees have full freedom to make the decisions. Therefore, in the angel corporation business, this structure might not be useful because the structure is simply defined by the formal rules not by the management.

3. Intuitionalism: The institutionalism approach cannot be applied to the angel corporation high tech business. The reason is that this approach purely legitimate by laws and followed by the govern actions. The high tech business needs some innovations and changes. Now, if it keeps legitimate by the laws, the activities of an organisation might be restricted. Sometimes it might be the normative approach or the coercive approach. But most likely by application of institutionalism end up with less profitability and less successive for a high tech business.

4. Contingencies: The contingency approach suits best to the angel corporation business. Because the newly high tech business can be similar in technology with comparison of other high tech organisation. The new high tech business can follow the same strategy and adopt the same technology from the other software industries. In contingency theory the management has to deal with some issues that cannot be avoided and that helps it to make its structure more efficient. The factors of the contingencies theory environment, size and technology is perfectly matched with the angel corporation characteristics.

Corporate Social Responsibility of Angel Corporation

The newly high tech business has the corporate social responsibility towards the society. Basically, to design about the CSR of this organisation, the management has to focus on the ethical behaviour of it. There should be a standard of principles in an organisation. Overall, firms in emerging economies do not appreciate the critical importance of communicating their CSR activities to stakeholders (Foo, 2007; Wright et al., 2003).

This high tech business works in order to maintain its responsibility economically, socially and towards the environment. It has to reduce the pollution and helps the global warming. The legislation of a high tech business also works as a part of the corporate social responsibility for the angel corporation. The organisation has to work in a manner that its behaviour should be accepted by the society.

Branco and Rodrigues (2006) reported that firms perceived to have a strong social responsibility image often have an increased ability to attract better job applicants, retain them once hired, and maintain employee morale.


"Organisational decisions about the relative importance of learning, and where authority lies for the management of the learning process, also have a significant impact on the support available for the learner. Senior staff, especially graduate trainees, had extensive support for learning from their peers and the HR department. Junior staff were dependent on the vagaries of the attitudes and abilities of their supervisor. Finally, decisions about the system of rewards, and whether support for learning is a component part of those qualities that the organisation seeks to reward, are equally important in determining the breadth and depth of work-based learning" (Ashton, 2004).

The recent work of Eraut et al. (1998), and Eraut (2000), on informal learning and tacit knowledge, Beckett and Hauger (2001) on practice-based informal workplace learning, Billett (2001) on developing vocational expertise and Boreham (2002) on work process knowledge, have all made important advances in our understanding of the nature and content of the learning process in the workplace. Branco and Rodrigues (2006) noted that when firms are able to demonstrate, by communicating effectively with a wide range of stakeholders, that they operate in accordance with social and ethical criteria, they can build a positive reputation, whereas failing to do so can be a source of risk to their reputation.