In order to study the principles and practices of business, it is important to understand the concept of an organization and what organization theory is. This is because principles and practices often derive from a theoretical study of the system that they are being applied to. These studies look to find aspects of systems that can generate a bearing on the performance of the specific system. This post will discuss what organization is, what organization theory is, the reasons for studying organization theory, and the characteristics that constitute a good organization theory.
What is organization?
The term organization can mean many things to a lot of different people. Organization connotes the idea of a group or groups, because when a person organizes they are usually placing random things into groups or categories that belong together. According to Webster’s Dictionary (2014), the definition of organization is that it is a business affiliation or political party formed together for a specific purpose, or else it means putting things in a certain order so that they can be found easily or arranging a party or event. However, the literature also proves that the concept of organization can take on many meanings. In this discussion, organization can be viewed as a conglomeration of individuals into a single unit with a common theme, goal or purpose that has been arranged so that similar parts of the whole are grouped together and more easily referenced for the planning and/or fulfillment of an output.
What is organization theory?
Organization theory attempts to give meaning to an organization as it relates to a conglomeration of people. In this respect, it studies such parts of an organization as the way that the organization obtains its values, the way that it interacts with society, the way that it organizes and derives power, and the reason that the organization becomes established as a unit (Heugens & Sherer, 2010). Theory seeks to define if the organization is looking to take responsibility for each aspect through the individual worker or as a combined function of the whole body of people. It also looks to discover how the organization may combine both types of responsibility to see how it can become a combined effort of the individual mixed with the organization (2010). It researches the structural and behavioral aspects of the organization and any methods disseminated by that organization to achieve its underlying goals (2010). It also seeks to discover the way that the organization uses these aspects to kinetically function towards its goals (Morgan, 2006). In doing so, it looks to discover how the organization deals with the external environment, how it manages change, and how flexible it is for inviting change (Morgan, 2006). It does not study normative values of doing business (Heugens & Sherer, 2010), but rather the evolution of business structure over time in order to optimize opportunity (Morgan, 2006). Organizational theory is a fluid, every changing philosophical view of the organization.
Why study organization theory?
Over time some common themes in the way that the organization has been managed have changed to match external stimuli that required those evolutions (Morgan, 2006). However, some organizations were able to operate perfectly in the original atmosphere and did not suffer from competitive forces. These organizations remained structured as they had been and continued to prosper, while others prospered from new functional arrangements (Morgan, 2006). Through the study of organization theory, business researchers are able to find the aspects that different functional arrangements maintain and why they do or do not work in specific productive atmospheres (Heugens & Sherer, 2010; Morgan, 2006). Pryor et’al (2011) show how the 5p’s model can be integrated through organization theory to develop strategic decision-making when dealing with questions of leadership and management in business. Jones & Munro (2005) add that organization theory examines the benefit of an organization to society, and what agency is receiving the benefit from specific organizations. In this regards, the study of organization theory helps examine different ways of making decisions and different ways an organization can process goods and services through management of individuals and their work functions in order to maximize the end value of the work exerted. This study can help to optimize performance within a corporation for the maximization of profits from more efficiently produced outputs.
What constitutes a good theory?
There are many different things involved with the study of organization theory. It is hard to decipher one good theory from another. However, one could determine a set of criteria for determining whether an organization theory is good or not (Van de Ven, 1989). The criteria should be such that the theory includes the study of the interrelationship between the individual worker and that worker’s relationship to the whole body of employees. Another criteria should include a consideration of the interplay between regular employees and organizational leadership. The theory should define the relationship of the internal environment of the organization to the external environment. The theory should describe the basic social tenants inside of the organization. It should also explain how the organization is able to deal with change.
Generally, the theory should show how the different aspects defined within it will serve to benefit the organization. In order to do this, the theory should define the type of organization that can be named to the theory and why the theory works with this type of organization, separate from other organization types. The theory should be able to be isolated from other theories through a specification of the way that the theory’s properties have been found to increase opportunities within a specific type of organizational system.
There are many different aspects of organization theory. There are also many different facets of organization that are studied through organization theory in order to create a theory that will last. There are historical considerations as well as current considerations. Integrating the right concepts into a theory could produce a good theory that will be widely practiced. When such theory goes into practice, organizational systems will benefit by optimizing contributions to the individual as well as the whole of society.
Heugens P, Scherer A. When Organization Theory Met Business Ethics: Toward Further Symbioses. Business Ethics Quarterly [serial online]. October 2010;20(4):643-672. Available from: Business Source Complete, Ipswich, MA. Accessed October 13, 2014.