OTIA Local Revision 1 PDF

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no imperinare no g * /Essay ~ Format indimemory cates use words in question ↳paragranambers) work X LOCAL REVISION 1 CHAPTER 1 (INTRODUCTION) Division of Labour Adam Smith’s theory of the effects of the division of labor on economic outcomes described important industrial management practices that would lead to widespread use of management techniques like production simplification and time and motion studies. The division of labor, including the differentiation of work tasks and the specialization of laborers, is central to the concept of social structure, one of the core concepts of organization theory. However, while Smith assumed that industrialization would lead to economic success and social progress, others saw reason to be skeptical about this assumption, starting with Karl Marx and subsequent Neo- Marxist scholars such as Braverman. ECONOMICS – Resources that are optimally allocated are said to be used with efficiency. Main assumptions in standard microeconomic theory: 1. Markets are examined as if Assumption they function in isolation (independent of its environmental context in the real market/ real world). 2. Firms are viewed as holistic entities (valid for describing competitive markets; not for decision making). 3. Firms are supposed to have a single objective (to maximise profit or value of firm). 4. There is perfect information (no information asymmetry). 2 5. Behaviour of producers (to maximise profit) and consumers (to maximise utility) is described as maximizing behaviour because the economic man (‘homo economicus’) is rational and selfish. Subsequently, behavioural economics examine human decision-making based on more realistic assumptions, eg prospect theory (people do not always act rationally) is opposite of the more rational expected utility theory. SOCIOLOGY – considered social context resulting in class/labour inequality and hegemonic power, culture and groups. PSYCHOLOGY – considered differing person-to-person response to environmental, organisational and group stimuli. ~re i happen ens wat X would whi -Economic - NORMATIVE VERSUS POSITIVE PERSPECTIVE Hatch: Taking a normative perspective means defining a theory by its practical applications. Being normative implies assessing a phenomenon on the basis of an ideal, a standard, or a model of how things should be. Advising organizations on the best technology and social structure for their purposes, or the most effective factory or office layouts, are popular normative pursuits. Today, the normative perspective is exemplified by best practices and benchmarking. Normative theories of best practice and benchmarking propose that emulating the methods or techniques of the most successful organizations will lead to similar success. Their danger lies in assuming that one organization’s success can be transferred to another. Calling for evidence- 3 based practice (i.e. positive perspective) is one way to improve the transferability of normative solutions, but providing evidence means grounding normative advice in practice over theory. HISTORY OF THEORIES micropsychology garwin3 Lamark favoured origin 4  CHAPTER 2 (INFORMATION AND KNOWLEDGE) Information topic is the most general yet the most open exam question. Some of you who prefer a clear ‘structure’ (outline) would find this intimidating while others would prefer its flexibility and free-flow expression for the writer. (IDEAL) MARKET: a. Products are homogenous and information is complete and uniformly distributed, which means that there are no information problems such as uncertainty, complexity, asymmetric information etc. b. Transactions are governed by complete contracts between all relevant parties and there is no reason to prefer markets above organisations or the other way around. The coordination mechanism in a perfect market is therefore the price, which is a sufficient statistic for communicating all there needs to be known for the parties to make the decision regarding the transactions. (IMPERFECT) MARKET: Real market (positive) a. Other mechanisms need to be introduced in order to minimise inefficiencies but at a certain cost, which can be identified with transactions costs. b. For example, incomplete information can give rise to incomplete contracts, which can also be the result of being unable to know in advance or to specify all eventualities, so there is always room for interpretation and discretion. c. Risk of incompleteness of contracts is especially high in situations of high information asymmetry, complexity and uncertainty, in the creative industries or in times of global changes and changes in the industry (see pages on complexity and uncertainty in D and S). In imperfect markets there could be uncertainty (about future activities) and asymmetric information (heterogeneously distributed where actors vary in their access to information), bringing about inefficiencies in the market. 5 MECHANISMS: a. Various mechanisms can be used to overcome information problems. Some of these involve placing the transaction within an organisation, or producing quasi-organisational configuration that is found on the spectrum between the perfect market and the ideal hierarchical organisation. Idea of Div of Labour key thing. Organisations are about organising information come to be now organisation franchise Qs guess # [ xam = iabout virtual organisation & effect WFH-How does that coordination ? Jennance culture : I need reduced, market or WFH. organisational influenced make Emerging tech can easier. monitoring much b. Various control and coordination mechanisms and the conditions in which they are applicable include monitoring, motivation, power, corporate control, participation etc. These mechanisms are designed to deal with information problems, at the same time minimising the potential for negative consequences of incomplete contracts. 6 c. Different types of control and coordination mechanisms and how each was related to specific types of information problems, for example: (1) roles of boundaries; formal/informal structures; roles, hierarchy, rules and routines (i.e way in which such issues mitigate information problems in an organisation); (2) power and culture issues (i.e the relationships between incomplete information and power; and how these, in turn, impact on structure and design); (3) the notion of a firm as a nexus of contracts; and (4) Weber’s model of BUREAUCRACY (see below): Weber predicted that rational-legal authority would replace the nepotism of traditional authority and the personality cults of charismatic authority, with merit-based selection driven by rationally formulated rules and laws. Societies based on rational-legal authority would, in principle, ensure the appropriate behavior of those in charge by binding them to the same laws and rules that define their right to lead. What is more, they would draw on a bigger and better pool of leaders because almost anyone can lead by following the rules and laws of a society based upon rational-legal authority. Weber was aware that the promise of rational-legal authority might never be realized in practice. He described the risks in 1924 in his The Theory of Social and Economic Organization. He proposed that bureaucracy could extend the technical efficiency of industrial organizations to all of society by rationalizing the social order. His insight depended on an analogy between the way in which technology rationalizes the economic order of business organizations and how bureaucracy might similarly improve the efficiency of organizations such as government bureaus. Weber’s analogy led modernist organization theorists of the 1950s and 1960s to believe the converse of Weber’s point, namely that bureaucratic rationalization would produce technical efficiency. keyword A1. What is the role of information in determining the boundaries of organisations and their Keyword structures? Concepts: Information and three boundaries 1. Info problems, including incomplete contract and anticipations /contingencies 2. Incomplete information  power  structure (flat/tall) and design (cen/decen) 7 3. 'intentional' non-uniform distribution of information (eg div of labour/specialisation  advantage to manager)  boost efficiency 4. Info  horizontal structure (team or matrix) B1. Compare the control and coordination framework developed in the course guide aA howcan de ? with Mintzberg’s six coordination mechanisms. subjGni - Link Mintzberg's configurations to OTIA Subject Guide control mechanisms: unisation. you gives innovative org (1) mutual adjustment (labour participation) – best for high uncertainty /decentralization Entrepreneurial -organisation. (2) direct supervision (power) – best for small firms machineaunisation mechanism~ (3) standardization of work (bureaucracy / monitoring) – best for low uncertainty (4) standardization of outputs (diversification) – best for large firms -communityctice of (5) standardization of skills / knowledge (group motivation) – best for professional groups; culturaorganisation (6) standardization of norms (culture) – best for strong corporate cultures Latest: Platform organisation – use of digital algorithm Other Comparisons: Taylor, Ford and Gilbreth’s Scientific Management (1911) Weber’s bureaucracy (1905)  Mintzberg’s configurations (1979)  Woodward’s Contingency theory (1958) 2023 EXAM / Q1 In his book Authority and Democracy, Christopher McMahon (2012) argued that managerial authority should not be thought of as that of a principal over an agent, but rather as an authority meant to facilitate mutually beneficial cooperation among employees with different aims. How does McMahon's insight compare with the distinction between control and coordination? 8  CHAPTER 3 (MONITORING) SCIENTIFIC MANAGEMENT (Theory X) Link together a. Taylorism and Fordism (time  profit); Gilbreths (motion ‘welfare’). This scientific method is used as an approach to reach organisational objectives, associated with mechanisms of control and coordination: (1) monitoring shirking happena dueto (2) motivation mechanisms (with focus on extrinsic Hawthorne Etea for care. workers mechanisms) : bility More observa men (3) centralised hierarchical structures (4) contracts that are nearly complete (5) task fragmentation etc. b. SM is linked to the increase in an organisation’s (high) spans of control, (reduced) hierarchic levels, (low) discretion, (low) administration costs and (low) uncertainty. HAWTHORNE EFFECT (Theory Y) a. Many of Taylor’s ideas focused on the way in which the performance of individuals could be improved, but the Hawthorne studies explored the behaviour of individuals in a social context. These were a set of experiments conducted by Elton Mayo in the 1920s and 1930s at Western Electric’s factory in a suburb of Chicago known as Hawthorne. The studies established how individuals’ behaviours are affected by the surroundings and by awareness of other observers and colleagues. 9 b. One of the surprising results of the experiments was that workers’ productivity was affected not so much by changes in physical environment as by the fact that they were being observed by the experimenters, and by the sense that someone was genuinely concerned about their workplace, which led to opportunities to discuss changes and allow for workers’ participation. More specifically, those perceiving themselves as objects of experimental observation tended to outperform their peers, even without additional intervention. c. A crucial element in Mayo’s findings was the effect that working in groups had on the individual and the recognition that one’s desire to stand with one’s fellows ‘outweighs the merely individual interest’  squealers and chiselers. A2 + B2. How does ‘scientific management’ address problems of coordination and Praise SM control in organisations?. it first. Critisice History Early 20th Century: Taylor's time studies (1880s); Gilbreth's motion studies and Ford's mass production. 1940s and 1950s: SM evolved into operations management, operations research and management cybernetics. 1980s: Total quality management. 1990s: Re-engineering. Characteristics Control refers to a one-to-one relationship (e.g. principal agent) where the agent needs incentives to work for the organisation (Taylorsim); whereas coordination is a situation where a network of interacting agents need to synchronise their activities with one another (Fordism). Advantages Efficiency and increased outputs; lower monitoring costs; higher span of control 10  McDonaldication su ↳ modern Limitations Human Relations school (Mayo) on hidden costs (poor quality, breakdown, boredom, absenteeism); Sources of resistance (labour strike, mistrust between management and union); Deskilling (Braverman, Noon and Blyton) Deskilling - American sociologist Harry Braverman introduced labor process theory with the idea that the owners of the means of production (capitalists) control work by systematically deskilling labor through job fragmentation and routinization, practices introduced under Taylor’s Scientific Management. The deskilling of labor continues until the work is so simple that very little training is required. Thus it becomes easy for managers to replace workers who put up resistance to the hegemonic power of management and in this way erode the workers’ power base to the point where they feel resistance is futile. When this occurs, control over the labor process shifts from workers to management. Deskilling allows owners to drive down the price of labor to enhance their profits but also exploits and degrades workers and contributes to their alienation from work and the workplace. Graham Sewell, an Australian organizational theorist, illustrated labor process control in his study of teams in an electronics organization. He found that control was maintained through electronic quality tests at various stages of an assembly process. The resulting quality data were symbolically displayed over each employee’s workstation using traffic lights: red meant the team member had exceeded quality error allowances, amber that they were within an acceptable range of error, and green that he or she had made no quality errors. This practice led not only to management control through vertical surveillance, but also to self-discipline and intense peer pressure in the form of horizontal surveillance. Sewell’s study showed that the horizontal control team members exerted upon each other by expressing their approval or disapproval was far more potent than the vertical control exerted by the managers. Relevance McDonalisation in fast food joints and call centres Alternatives 1. Bonding and monitoring are almost the same thing. Bonding means that a manager takes the initiative to bind herself and be monitored (eg have the company books audited or 11  install a board of directors); monitoring means that the outsider like shareholders take the initiative (eg to reduce on-the-job consumption). 2. In the 1960s, concern for the interaction between two organizational subsystems— social structure and technology — led to the development of socio-technical systems theory. The Tavistock Institute of Human Relations in the UK theorized that any change in technology affects social relationships, attitudes, and feelings about work, which in turn affect the use and use of the technology. Consequently, Tavistock researchers surprisingly recommended finding the best combination of technical and social systems to serve a particular goal, even if it means compromising the optimality of one or both subsystems. The proposals of socio-technical theory were contrary to many of the principles of scientific management, but like Taylor, their proponents intended to offer the means to overcome the disempowering, socially conflicted tendencies Marx identified with capitalism. Socio-technical systems theory also underpins newer forms of organization such as matrix structures and networks, and lends support to Follett’s ideas about workplace democracy and Durkheim’s about informal organization. Criticisms Taylor’s belief in the powers of objective measurement and the discovery of laws governing worker efficiency carried over into the modern perspective where scientific management techniques justify all manner of rationalization schemes. However, critics regard Taylorism not as a way to make organizations more rational through efficiency, but as a rationale to justify the unprecedented power capitalists and managers enjoy today. 2023 EXAM / Q2 Technologies known as “ubiquitous computing” provide data that is less about how employees perform when working with computers, and more about how they behave away from the computer, whether in Homo economist the workplace, at home, or in transit. To what extent can the use of these technologies in the workplace be seen as a continuation of the principles of scientific management? Can out both ways (Fordism) workers. of Enhances reskilled acceptanceperform I Decreases Enhance who individuals( had 12  of CHAPTER 4 (INDIVIDUAL MOTIVATION) school -keythought S I Can management Science Theory · yarogy Thores. (individuanation ( Mintial des Conout Maslow & & - , & VS = = - AGENCY THEORY S Pro less Adams (1tacey dynamicom room It addresses the problem of how to control managers (agents) to ensure that they act in the best interests of owners (principals). This is typically done by designing contracts that specify goals and measures, and then monitoring and rewarding goal-related performance along the lines described by cybernetic control theory. However, according to agency theorists, the ability of principals to monitor their agents’ performance against outcomes like profitability depends upon the amount, relevance, and quality of information available, which is often easy for managers to manipulate. This dicey situation is known as the agency problem. Whether to choose behavior or outcome controls becomes a question of the costs associated with collecting the information required to minimize the chance that agents will shirk their responsibilities to serve the owners’ interests. Behavioral controls can be costly if monitoring behavior requires either the use of added layers of management (e.g., hiring agents to watch other agents) or the development of sophisticated information systems, such as cost accounting, budgeting, and formal reporting. As behavioral control becomes too unwieldy or too expensive, output control generally becomes more attractive. Output control is least costly when output can be readily measured (e.g., number of units shipped); however, if outputs are difficult to measure (e.g., quality or customer satisfaction are as important as production quantities), output control becomes less attractive. American organization theorist Kathleen Eisenhardt suggested that there are a variety of control strategies available to organizations that face the agency problem: a. Design a simple routine job so that behaviors can be easily observed, and to reward based upon the performance of targeted behaviors (i.e., behavioral control). 13 b. Design a more complex interesting job and invest in information systems (e.g., budgeting systems, audits, or additional layers of management) as a means of gaining knowledge about behaviors and rewarding performance (a combination of behavior and output controls). c. Design more complex and interesting jobs, but use a much simpler evaluation scheme that bases salary increases and/or bonuses (including stock options) on the overall performance of the firm (e.g., profits or revenues). This alternative places agents in the same position as principals with respect to risk and reward. The alignment of rewards for agents and principals is presumed to align their interests as well, and thereby lead agents to make the same decisions that principals would make in their place. When this occurs, the need for monitoring the agents is reduced thus overcoming the drawbacks of the other two alternatives. This third alternative proves to have its own drawbacks however. Agents resist being penalized for things over which they have no control. They therefore demand higher inducements to offset the market risk they are forced to accept with this alternative. d. Eliminate the divergent interests of principals and agents. This she proposed could be done using the organization’s culture to control behavior, an idea first presented by Ouchi as clan control. Agency theory has two streams: 1. POSITIVE THEORY OF AGENCY it If. popular Concern: Firm is a nexus of contracts. Organisational forms are efficient – otherwise contractual relationships would not exist. important 2. PRINCIPAL-AGENT THEORY very How principal should design the agent’s reward structure a. Where the agent is risk neutral, a leasing (‘long rent’) contract is the optimal solution to the P–A problem, whereas a reward system would be sub-optimal (specifically if it is based on ‘performance related pay’). The optimal contract for a risk averse principal and agent is the rent contract. 14  gement manDece - G Theory b. Reward systems that are based on extrinsic motivation are inefficient and must be replaced by other forms of motivation mechanisms  depends on distribution of information and attitude to risk between Principals (usually assumed to be risk taking, because they can usually employ hedging) and Agents (usually assumed to be risk averse). Warning: Economists do not completely disregard non-financial rewards. They use the term ‘utility’, which can have a monetary and a non-monetary dimension. common interestions. A3: What are the differences between content and process theories of motivation? How do these compare with principal-agent theories of motivation? B3: Give examples of different approaches to motivation in organisations. What are their advantages and disadvantages? PROCESS VS CONTENT THEORY Organization theorists Haridimos Tsoukas, from Greece, and Robert Chia, of the UK, suggest creating a theory of organization that assumes change (process), rather than stability (content), as its point of departure. They argue that, since organizing is a continually evolving process, organizations are in a perpetual state of becoming. This reformulation focuses attention on emergence, flux, change, and movement as opposed to the entities, structures, and end states traditionally promoted by the modern perspective. We need to stop giving ontological priority to organization, thereby making change an exceptional effect, produced only under specific circumstances by certain people (change agents). We should rather start from the premise that change is pervasive and indivisible. They further explain that: ‘Change must not be thought of as a property of organization. Rather, organization must be understood as an emergent property of change. Change is ontologically prior to organization—it is the condition of possibility for organization.’ Drawing on process-oriented philosophers and ethnomethodologists, they argue that change is the reweaving of actors’ webs of beliefs and habits of action as a result of new experiences 15 obtained through interactions. Insofar as this is an ongoing process, that is, to the extent actors try to make sense of and act coherently in the world, change is inherent in human action. Organization is an attempt to order the intrinsic flux of human action, to channel it towards certain ends, to give it a particular shape, through generalizing and institutionalizing particular meanings and rules. At the same time, organization is a pattern that is constituted, shaped, emerging from change. Tsoukas and Ann Langley claim that process theory is inspired by ‘the worldview that sees processes, rather than substances, as the basic forms of the universe. A process orientation prioritizes activity over product, change over persistence, novelty over expression over determination. Becoming, change, flux as well as creativity, disruption, and indeterminism are the main themes of a process worldview. CONTENT THEORIES PROCESS THEORIES 1. Define what is meant by End results/objectives Strategies towards end ‘content theories’ or ‘process objectives theories’. 2. Compare and contrast Individual characteristics Underlying mechanisms between the two? based on existing needs (BTF: coalition of participants) 3. Relative Desired consequences How these desires come advantages/disadvantages about (eg satisficing, sequential decision making) 4. Concrete examples from Maslow, Herzberg and Adams, Vroom and goal literature or own experience McClelland & i Me setting (Locke) Stabltivation 16 5. Intellectual controversy (Criticisms!) PAT is closer to content theory. But the mechanisms that produce particular outcomes; such as in the operation of a market for corporate control (mechanism/process) makes it possibly a process theory. National culture is another criticism. 6. Conclusion: Compare with economic incentives Many answers claim that economists only think in financial terms (for example that incentives are limited to financial/monetary compensation). Though this is understandable such as the expression ‘pay-by-result’ from principal agent theory), it is incorrect in general. Economists use the term ‘utility’ which can have a monetary and a non-monetary dimension. In your answer you are expected to express your understanding that non-monetary elements are not excluded from economic theory but that non-economists may provide a wider context, eg psychology. SPECIAL!!! 17  COMBINED REVISION 2 Individual motivation : Economics of PA theory - CHAPTER 5 (GROUP MOTIVATION) man is rational achieving efficiency , all think the same no need psychology (thinking) because you arerational know one person's thinking , know everybody's thinking methodological ~ all work add together reductionism C pulled down Principal cowner management by Winst info asymmetry 1 Incentive] PATC4 Science /discipline) mem bar Agent I manager ( D ↑ 3 moras nazard < monitoring Scientific ECOnS t Management Alworker ( transaction cost 110 Hum" an Resources Principal Hawthor See performance of best player team labourT in the. effect. I MVP ! S A A by A A A Pulled up Group formation - psych MVP. Group Socio -Game Theory Analysis Role Team Production vs shirking/clacking/deflecting /non-cooperative /freeloading pareto -low visibility. S move from low visibility Nash to ~ non additive task Paretor cannot tell who give more effort 18  , group effort low visibility : in members Group exercise power to of Bank ro o m use example wining. to trust the management the group get trust each other so they Get them to don't slack. 19  Hawthornestudie experiment ; workers' as trust by PA trusting them. REVIEW E Question 5 Zone A: What is the significance of the Hawthorne studies, and what do they teach us about the challenges when working in a team? Zone B: How might an organisation overcome the challenges of working in a team? Use the Hawthorne studies to illustrate your arguments. Reading for this question SG Chap 2, 3 and 5; BH Chap 11 and 13 (pp 358); DS Chap 7. Alchian and Demsetz ‘Production, information costs, and economic organization’, The American Economic Review 62(5) 1972, pp.777–95. INTRODUCTION 1. Describe the historical and socio-political background of the Hawthorne studies, which is to enquire into the effect of physical / social environment on workers (for example: the effect of lighting on productivity observed in the six-women Relay Assembly Room experiment in 1927). 2. Elaborate on the experimenter effects (known as Hawthorne effect) and social effects (importance of HRM) found in those studies, and the types of emerging norms discovered: chiselling, squealing, rate busting from the 14-men Bank Wiring Room experiment in 1931. 3. Discuss the notion of a team and its relation to organisations. Organisation is a framework to: a. reap synergies of the team b. internalise positive externalities c. manage the notion of shirking - A and D's paper, here: "One method of reducing shirking is for someone to specialize as a monitor to check the input performance of team members. But who will monitor the monitor? One constraint on the monitor is the aforesaid market competition offered by other monitors, but for reasons already given, that 20 is not perfectly effective. Another constraint can be imposed on the monitor: give him title to the net earnings of the team, net of payments to other inputs. If owners of cooperating inputs agree with the monitor that he is to receive any residual product above prescribed amounts (hopefully, the marginal value products of the other inputs), the monitor will have an added incentive not to shirk as a monitor. Specialization in monitoring plus reliance on a residual claimant status will reduce shirking; but additional links are needed to forge the firm of classical economic theory. How will the residual claimant monitor the other inputs? "We use the term monitor to connote several activities in addition to its disciplinary connotation. It connotes measuring output performance, apportioning rewards, observing the input behavior of inputs as means of detecting or estimating their marginal productivity and giving assignments or instructions in what to do and how to do it. (It also includes, as we shall show later, authority to terminate or revise contracts.) Perhaps the contrast between a football coach and team captain is helpful. The coach selects strategies and tactics and sends in instructions about what plays to utilize. The captain is essentially an observer and reporter of the performance at close hand of the members. The latter is an inspector-steward and the former a supervisor manager. For the present all these activities are included in the rubric "monitoring." All these tasks are, in principle, negotiable across markets, but we are presuming that such market measurement of marginal productivities and job reassignments are not so cheaply performed for team production. And in particular our analysis suggests that it is not so much the costs of spontaneously negotiating contracts in the markets among groups for team production as it is the detection of the performance of individual members of the team that calls for the organization noted here. "The specialist who receives the residual rewards will be the monitor of the members of the team (i.e., will manage the use of cooperative inputs). The monitor earns his residual through the reduction in shirking that he brings about, not only by the prices that he agrees to pay the owners of the inputs, but also by observing and directing the actions or uses of these inputs. Managing or examining the ways to which inputs are used in team production is a method of metering the marginal productivity of individual inputs to the team's output. "To discipline team members and reduce shirking, the residual claimant must have power to revise the contract terms and incentives of individual members without having to terminate or alter every other input's contract. Hence, team members who seek to increase their productivity will assign to the monitor not only the residual claimant right but also the right to alter individual membership and performance on the team. Each team member, of course, can terminate his own membership (i.e., quit the team), but only the monitor may unilaterally terminate the membership of any of the other members without necessarily terminating the team itself or his association with the team; and he alone can expand or reduce membership, alter the mix of membership, or sell the right to be the residual claimant-monitor of the team. It is this entire bundle of rights: 1) 21 to be a residual claimant; 2) to observe input behavior; 3) to be the central party common to all contracts with inputs; 4) to alter the membership of the team; and 5) to sell these rights, that defines the ownership (or the employer) of the classical (capitalist, free-enterprise) firm. The coalescing of these rights has arisen, our analysis asserts, because it resolves the shirking- information problem of team production better than does the noncentralized contractual arrangement. "The relationship of each team member to the owner of the firm (i.e., the party common to all input contracts and the residual claimant) is simply a ('quid pro quo" contract. Each makes a purchase and sale. The employee ('orders" the owner of the team to pay him money in the same sense that the employer directs the team member to perform certain acts. The employee can terminate the contract as readily as can the employer, and long term contracts, therefore, are not an essential attribute of the firm. Nor are 'authoritarian', 'dictational'," or 'fiat' attributes relevant to the conception of the firm or its efficiency. "In summary, two necessary conditions exist for the emergence of the firm on the prior assumption that more than pecuniary wealth enter utility functions: 1) It is possible to increase productivity through team-oriented production, a production technique for which it is costly to directly measure the marginal outputs of the cooperating inputs. This makes it more difficult to restrict shirking through simple market exchange between cooperating inputs. 2) It is economical to estimate marginal productivity by observing or specifying input behavior. The simultaneous occurrence of both these preconditions leads to the contractual organization of inputs, known as the classical capitalist firms with (a) joint input production, (b) several input owners, (c) one party who is common to all the contracts of the joint inputs, (d) who has rights to renegotiate any input's contract independently of contracts with other input owners, (e) who holds the residual claim, and (f) who has the right to sell his central contractual residual status." (pp 781-3) DIFFERENCES BETWEEN ECONOMICS AND SOCIOLOGY/PSYCHOLOGY 4. Whereas economists often derive their concept of the team from separable production functions, sociologists and psychologists take a broader view, distinguishing the team from an aggregate of independent individuals and introducing the idea of non-additive tasks carried out by a network of members with relatively durable relationships: a. Various forms of tasks could then be described, for example, additive (separable production to use economists’ terms) or conjunctive (non-separable production). b. Thus, the Hawthorne studies, designed to test the efficacy of scientific 22 management, have contributed to the ‘human relations’ approach to organisations, introducing the significance of emerging norms in informal organisations/teams, and the effect of these norms on productivity. c. In so doing, sociologists often go beyond the economists’ model of hierarchically structured set of independent individuals who are subject to the principal’s control. d. Conclusion: The Hawthorne studies demonstrated the emergence of informal norms, both positive and negative, and their effect upon efficiency and productivity. OTHER ISSUES 5. Elaborate on the role of emerging norms and culture in both formal and informal groups, both of which are found within various organisations. The distinction between: a. formal groups (an ideal construct like Weber’s bureaucracy, where people follow the dictates of the organisation design and task or job interdependencies); and b. informal structures (with little or no formal basis) can be highlighted. 2023 EXAM / Q3 What are the sources and implications of workplace stress? Under which conditions is workplace stress a bad thing? Under which conditions is it acceptable or even productive? 23  CHAPTER 6 (POWER AND AUTHORITY) ALCHIAN AND DEMSETZ: These economists deem markets and organisations to be similar in that both consist of a voluntary transaction between a consumer and a producer of goods and services. ECONOMIC ‘POWER’: a. Market power: such as monopolies b. Bargaining power and their antecedents c. Behavioural theory of the firm SOCIOLOGICAL ‘POWER’: a. Power is a resource held by certain actors and groups to promote their interests and leverage change. Different sources of power include authority, knowledge and technologies. 24 b. Radical perspectives on power include Marxist models, Lukes’ three dimensions of power and the work of Foucault (on power and the construction of subjects). LUKES Lukes’s third face of power incorporates Gramsci’s notion of hegemony. This face of power is revealed when social practices shaping the desires and behavior of the dominated work against their interests and cause their oppression. Lukes’ theory is that, by giving active consent to hegemonic interests, workers collude in their own domination. This can lead to paradoxes. For example, employees granted greater autonomy at work can end up relinquishing more self- interest to benefit the organization. In a study of a knowledge-intensive firm, Deetz found that employees worked long hours and under-reported the hours that they worked, slept at worksites to maximize the time they could devote to work, and dealt with aggressive and sometimes abusive clients, all in the name of autonomy. A4: What are the various sources of power according to sociologists and how do they compare with the way economists think of power? B4: What types of power might exist, according to economists, in markets? How do they compare to the way sociologists think of power? Apart from A&D, bargaining power and BTF, mention Market power (esp monopoly in a market failure is a price-setter rather than free market for price-taker). Sociology sees power as (1) an asset (an end objective), not just a means, eg authority, knowledge, technology. 25 (Example: PFEFFER AND SALANCIK’s resource dependence theory argued that the configuration of the environment is a powerful influence on management strategy and organizational structure. An analysis of the interorganizational network can help an organization’s managers understand the power/ dependence relationships that exist between their organization and other network actors. Such knowledge allows managers to anticipate likely sources of influence from the environment and suggests ways in which the organization can offset some of this influence by creating countervailing dependence for others. Establishing multiple sources of supply helps manage dependence by reducing the power of any one supplier. Where there are benefits to using a limited number of suppliers, such as with supply chain management, contracting is a common strategy for managing dependency. Creating joint ventures with customers or suppliers or acquiring or merging with them (called vertical integration), or forming alliances or merging with competitors to concentrate negotiating power over suppliers and customers (called horizontal integration) are additional strategies.) (2) radical role (Marxist, Lukes, Foucault - subjectivation: construction of subject) (Example: FOUCAULT – He believed disciplinary power to be neither inherently good nor bad. In addition to its potential for abuse, he saw its possibilities to produce pleasure, with the implication that we might not want to resist all disciplinary practices. Power/knowledge is exercised through practices that arise in discourse to regulate what will be perceived as normal. Discursive practices derive from language such as that found in academic jargon or in the technical terminology used in industry or the many branches of government. They imply a stronger normative position because, as Foucault and others point out, without knowledge of discursive practices, the powerless cannot defend themselves. The concept of discourse emerged from poststructuralist linguistics. It is a mindset, a cultural worldview, and/or an institutionalized logic that provides the, always partial, perspective of a particular group. For Foucault, discourses were constructed historically according to the relationships of power existing within a society at a particular point in time. Those who exercised power allowed some things to be said, written, and thought, but not others and these controlled practices gave rise to the discourse that guides meaning making within its boundaries.) Conclusion: Either (1) process of power (mainly economics + Foucault) vs content of power (mainly sociology + market power) or (2) pre-contract (economics) vs post-contract (sociology) 26 Substanc 27  lank of power understandi powerng POWER AND FEMINISM - zwaf feminism - dight for. power One popular feminist theory about why organizations are gendered holds that private life is characterized by caring and a sense of community associated with the feminine, while public life fits the expectations set by rationality and competitiveness, characteristics associated with the masculine. A number of feminist scholars have argued that the separation of male and female domains and the practices associated with them (e.g., working outside the home versus child rearing) reinforces a binary view of gender that underpins the everyday actions and interactions of both men and women in the workplace. Men are considered natural decision makers and leaders, while women are expected to be nurturing and play supporting roles. Gendering thus reproduces traditional societal relations of domination and subordination between men and women. Calls to undermine the ongoing and taken-for-granted ways organizations produce and reproduce gendered outcomes led feminists to look beyond explanations for why women and other minorities are not better represented in the primary sector. Simply replacing male with female practices, after all, would not end stratification; it would only replace one dominant group with another, and anyway was not likely to happen in the competitive world of corporations. Although the feminist literature is far from homogeneous, deconstructing and overturning the practice of constructing gender as part of organizational life became a priority for some who turned their attention on the ‘systematic forces that generate, maintain, and replicate gendered relations of domination.’ Joan Acker, an American sociologist, based her work on the feminist theory that language is gendered because meaning circulates around a network of images that have distinctive male or female associations. If language is gendered, then organizations must be gendered as well in that they produce and are the discursive products of gender-based power relations. This is because masculine ways of doing things are inherent in structural, ideological, and symbolic aspects of organization as well as in the everyday interactions and practices of organizing. On this basis Acker proposed the concept of gendered organizations. Building on Acker’s work, others have suggested that masculinity is deeply embedded in bureaucracy by its focus on hierarchy, the impersonal application of rules, and the separation of work and private life. For example, several organization theorists maintain that hierarchy is premised on the assumption of a masculine elite that depends on a feminized support staff, and careers based on one’s continued commitment to the organization. While women’s interests are well represented in organizations through such policies as those establishing women’s advisory committees, in effect this amounts to unequal representation. 28 Such committees are explicitly separated from the dominant male structure, which has the effect of both stigmatizing women and keeping them outside the inner circle of power. With the ambition of overcoming this situation, both scholars and activists have proposed creating alternatives to bureaucracy that reflect ‘women’s ways of organizing.’ In practice such organizations have proven effective, particularly in health care and domestic violence. Joyce Fletcher suggested that definitions of work have a masculine bias. In a high-tech organization she found that the characteristics and behaviors worthy of promotion were autonomy, technical competence, self-promotion, individual heroics, and being able to quantify issues. Relational practices (which she associated with feminine belief systems) included watching over the wellbeing of a project, contributing to programs, mutual empowering, and collaborative teamwork, all of which were undervalued or ignored. Inspired by Foucault, Fletcher claimed such biased practices had the effect of disappearing relational practices by interpreting them as inappropriate for work and/or as a sign of weakness. 2023 EXAM / Q4 Why might bargaining result in non-optimal decisions? How can this problem be overcome? 29  management discipla structured - organizational L strong culture L Corporate performance &) I : sub culture groupmotivation > anticultureculture sociology - - hegemonic altruism Psychology - trust ; reciprocity ; Game Thomy , economics - CHAPTER 7 (CULTURE) CORPORATE CULTURE: a. A positive corporate culture facilitates trust between employees, an attitude that mitigates against the negative consequences of asymmetric information and uncertainty. Here the issue of coordination of the web of relationships in an organisation is most relevant, but the issue of control should also be considered. b. Strong corporate culture that is aligned with the interests of the organisation as a whole can facilitate bilateral or generalised reciprocity (to generate so-called ‘helping cultures’) and econs mitigate the problem of shirking, inherent in the economic approaches to team production. c. When these problems are limited in their consequences, or when they are mitigated by other means, one could argue that corporate culture is less of a concern as a mechanism of control and coordination. Whenproblemsaene re e means areother need culture work from aed home , culture to CLAN CONTROL American organization theorist William Ouchi introduced one of the strongest notions of culture as control with his concept of clan control, part of a general typology of organizational control mechanisms that also included market and bureaucratic control. The role of culture is clear in clan control , which depends upon the socialization of new organizational members such that they internalize cultural values, goals, expectations, and practices that will drive them to desired levels of performance. Ouchi noted that, once internalized, implicit understandings direct and coordinate employees’ behavior and cause them to internally monitor their own behavior and that of others. In clan control, managers take charge of cultural norms and expectations and make certain that all organizational members accept and internalize them. Once established, culture then controls employees on behalf of the managers who control the culture. It should be a simple matter of redirection to change a culture whose management employs clan control. 30 Schein’s theory supports modernist normative ambitions to control culture but Schein presented a more sophisticated rendering of the management of culture change. Based on his theory of culture as assumptions, values, and artifacts, Schein claimed that organizational cultures only change when new values are introduced by the decree or example of top management. But Schein notes that only when the new values are absorbed into unconscious assumptions will the culture actually change, giving employees a controlling role as well. Members of the culture must personally experience the benefits of proposed new values for cultural change to take hold. 31 Some culture researchers focus on the ways in which organizational cultures are inconsistent, ambiguous, and in a constant state of flux. In this view alliances or coalitions never stabilize into subcultures and certainly not into an integrated culture because discourse and its focal issues are always changing. In this spirit American organizational researchers Meyerson and Martin provided an image of organizational culture as fragmentation to offset what they regarded as overly consensual views of organizational culture they categorized as unity (to indicate a unifying set of values and beliefs) and differentiation (i.e., subcultural). Deconstructive readings such as Martin’s reveal the possibilities of dominance and other forms of power (such as the woman’s creative power to give birth and to help develop a new product) without the necessity to settle the matter of which interpretation wins. It is the unending struggle for domination through the control of meaning that critical postmodernists seek to reveal. The point of deconstruction is to sensitize you to this ongoing power struggle, which, according to postmodernists, is where organizing takes place. Deconstruction can reveal the illusions created by hollow and ambiguous identity claims, rituals, and other meaningless organizational symbols. Michael Rosen’s study of Breakfast at Spiro’s revealed this organizational ritual as involving acts of imitation (e.g., parroting desired feelings rather than having those feelings) that seduced members into conformity with management ideology. Another deconstructionist, Australian sociologist Ezzy suggested that organizational cultures claiming to value trust and family are contradicted by rewards for individual achievement rather than cooperation, and by layoffs during hard times. He argues that workers who trust and invest themselves in an organizational culture that controls and then abandons them have fallen prey to illusion. GAME THEORY a. Since culture affects the way in which people make decisions, these could be incorporated into game theory, a set of principles that regulates interactions/transactions in society in the context of interdependent decision-making problems. The existence of a trusting culture changes the utilities of the players in the game, replacing competition with collaboration and thereby mitigating moral hazard and adverse selection. b. Utility: Abiding by cultural norms would increase one’s utility. If these norms are so structured as to increase the utility of collaboration and decrease the utility of defection, they could be considered as a method of solving social loafing (‘prisoners’ dilemma’), replacing it by a game in which the Nash equilibrium coincides with a Pareto optimal solution. 32 HEGEMONY / HEGEMONIC CULTURE In Marxist theory, hegemony is a form of domination in which the interests of the ruling class become the status quo through unquestioning acceptance. This is why postmodernists deconstruct the Grand Narratives of modern organization theory; deconstruction reveals the complicity of these narratives in the capitalist hegemonic order and undermines its hold on us. Deconstruction is only an emancipatory first move toward freedom from modernist habits of thought (e.g., belief that their applications of rationality are universally beneficial). These postmodernists imagine organizational reconstructions based on non-modernist conceptions. For this purpose the assumptions and values of the indigenous peoples whose voices have been silenced by modernist hegemony can prove useful. For example, many American Indian cultures believe that responsibility for protecting the environment (Mother Earth) lies in their hands. Contrast their point of view with the modern belief that exploitative practices, such as strip mining, traditional logging, hunting species to extinction, overgrazing prairies, and destroying the rainforests, are the right of those possessing legal claim to those resources. In this context, postmodern critics ask how modern societies manage to silence such voices as those of indigenous peoples and with what consequences? Italian Marxist theorist Antonio Gramsci presented an explanation of false consciousness in his theory of hegemony. Workers accept oppression and exploitation because institutional and ideological forms of domination become part of their taken for-granted everyday reality. Hegemony occurs when the practices and values of a culture or institution align with and maintain existing systems of wealth and power. Hegemonic practices never overtly coerce anyone, instead they lull you subtly and incessantly into regarding as normal and natural the established ways of thinking and talking that privilege the elite. Question A5: Explain the difference between additive and non-additive tasks (such as conjunctive and disjunctive tasks). How might the corporate culture affect the performance of these tasks? B5: As a manager, would you prefer your employees to work as a team or within a division of labour setup? How might corporate culture affect your decision? 33 C5: Teamwork: Different kinds of (1) teams (production teams vs cross-functional project teams); and (2) tasks (additive low-interdependent tasks and A&D non-additive high- interdependent tasks) namely conjunctive weak-link tasks versus disjunctive strong-link tasks. Problem: shirking (free-loading; non-cooperative) in team production C7: Solution: Strong corporate helping culture through bilateralised or generalised reciprocity. But counter-culture norms like rate-busters in Hawthorne studies. Extras: (1) Game theory: PD and A&D (weak leadership or weak culture); (2) Human Relations school; STS (3) Recent research: peer group; surveillance, concertive control. 2023 EXAM / Q5 Compare and contrast different approaches to conceptualising “culture”. How might these be useful to management theorists? SPECIAL!! 34  mechanism is useless. Democracy Surveillance without punishment industrial democracy control. labour as control Participation motive Japanese use labour participation profit ↳ Because of cloyment loyalty. Labour Firm Capitalist Firm In ↳ company for Mutual Adjustment Supervision/ Direct < Mintzberg life- v ~ study of work processed ↳ want to do good Theory Y vs Theory X for life ! motivational theory Scientific Management Hawthorne COMBINED REVISION 3 Best Partnership for 2 control Mechanism mechanisms control Group Incentive monitoring participationeel - labour ation Incentive individual monitoring particip · labour CHAPTER 8 (PARTICIPATION AND DEMOCRACY) - I - ind Group Power I powers Incentive labour culture culture Incentive ! - Group monitoring Although suggestions for achieving workplace democracy run the gamut from participation and power monitoring ? group Incentive stock ownership, to worker cooperatives and labor-managed firms (LMFs), it is the latter form power individual - incentives of organization that most directly challenges capitalism by embracing democratic principles and labour promoting collective property ownership. Cooperatives are independent non-profit groups organized by and for the benefit of their members. They have a long history. One of the earliest cooperatives, established over 250 years ago, was Benjamin Franklin’s Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. The New Mexico Rural Electric Cooperatives, another example, is a cooperative of cooperatives—one generating electricity and nineteen others handling its distribution. The plywood industry of the Pacific Northwest was taken over by several independent cooperatives formed by local workers when the plants became unprofitable. Many towns have food and day care cooperatives. A group of British weavers formed the Rochdale Equitable Pioneers Society in the UK based on the seven cooperative principles that underlie most cooperatives in existence today. These principles include ownership and governance by employees, decisions reached by the democratic vote of all employees, and the distribution of economic surpluses among employees in an equitable way, such as based on pay grade or hours worked. Those who promote cooperative organization argue that worker ownership leads to more socially responsible and community-based decision making and creates a supportive network. labourfim ownea r have One of the largest and most successful cooperatives in the world is Mondragón founded in the mid-1950s in the Basque region of Northern Spain. This worker-owned organization consists of over one hundred industrial, agricultural, housing, educational, financial, and distribution cooperatives. Its notable features include an initial capital contribution by all new members, restrictions on the ratio of pay between the highest and lowest paid workers, and the rule that the cooperative’s earnings may be distributed only as wages or pensions — no dividends are paid. 35  owners of capital hires Labours. labour lives capital MARY FOLLETT Follet (1924) formed her theory that the principles that make social communities strong can be applied to creating successful government and other organizations. She presented a management theory based on the principle of self-government which would facilitate ‘the growth of individuals and of the groups to which they belonged.’ She argued that ‘by directly interacting with one another to achieve their common goals, the members of a group fulfilled themselves through the process of the group’s development.’ Her ideas anticipated by many decades the current interest in workplace democracy and nonhierarchical networks. Follett promoted the view that organizations within a democratic society should embrace democratic ideals, and that power should be power with not power over people. As she put it: You cannot coordinate purpose without developing purpose, it is part of the same process. Some people want to give the workmen a share in carrying out the purpose of the plant and do not see that that involves a share in creating the purpose of the plant. Thus, in opposition to Marx, Follett proposed the idea that power is a source of creative energy. She saw the process of creating joint power over a conflict situation as an alternative to viewing power as a competitive force based in domination. CAPITALIST FIRM AND LABOUR FIRM: a. Capital hires labour versus labour hires capital); distributions of risk in each scenario; and costs and benefits of each; labour’s attitude to risk (labour risk-taking or risk averse?) and objectives of the organisation. voting Theory b. Worker participation depends on the objectives of the stakeholders involved, the strategy of the organisation, accepted norms, Imposiblity theorem values, culture or environmental constraints. Impossible to have decision madetha,a spy 36  most capitalist firm , there's risk taking A6: What are the costs and benefits of encouraging worker participation? B6: As a manager, why would you decide to encourage worker participation in an organisation? Concept of worker participation vs capital firm (labour hires capital) Distribution of risks Advantages and disadvantages - give context such as corporate culture, environment. No fixed answer! Decision: is Labour risk-taking or risk-averse? What is firm's objectives? Review F Question 6 Zone A: In what ways can the organisation involve labour in decision making processes? What considerations should be taken into account when involving labour? Zone B: Who might benefit from involving labour in decision making process within organisations and how could this be achieved? Reading for this question SG Chap 8; BH Chap 18 Abell and Reyniers ‘The emergence and viability of participating firms’ in Munshi, S. and B.P. Abraham (eds) Good governance, democratic societies and globalization. Miller, Gary J. Managerial dilemmas: The political economy of hierarchy. Chapter 4. FOUNDATION 1. Organisations may involve labour, either through ownership (labour owns capital) or in the decision-making process (labour votes on issues pertaining to the organisation). Both of these dimensions lie on a spectrum (from 0 per cent to 100 per cent ownership), and each has different consequences: a. in terms of risk and productivity, and 37  b. in terms of control (motivating individuals to work in the interest of their , properson company, commitment, etc.) and coordination (sharing information). psu + socio are Prolabour A comparison between a neoclassical, simple hierarchy and a labour partnership could be Rationality Econs are pro described along the lines of Figure 8.1 in the subject guide. (Note: The Zone B question of ‘who benefits’ depends on the interests of the various stakeholders. One approach is to say that labour is more risk-averse than capital, and a good answer would explain why this might be so. In this case, less labour partnership would mean that capital carries more risk than labour and both sides benefit equally. However, labour may have other interests as well such as higher compensation at the price of lower profits. A good answer might discuss this assumption critically, exploring he limitations of the argument, etc.) FORMS 2. On this foundation, an essay might go on to discuss various forms that employee ownership might take (cooperatives, share schemes) and how these might promote control and/or coordination. Economics 3. Relevant economic theories challenge the effectiveness of worker involvement in the decision-making process (Arrow’s impossibility theorem) or point to the role of financial incentives (P–A theory). Sociology 4. On the other hand, sociological approaches have demonstrated links between worker ownership, participation, motivation and performance, for example, human relations (Coch and French) and the Ohio School. These answers also focused on the problems and obstacles to labour partnerships. 5. One line of reasoning would be to draw on empirical evidence that shows that participation could have a negative effect on the company’s performance (though findings indicate that this effect is associated with the interaction between financial involvement and involvement in the decision-making process). Other issues 6. Very effective answers would: a. contrast sociological and economic theories on participation 38 b. discuss the usefulness of ownership as a mechanism for raising performance (e.g. noting that ownership may not always mean high participation), a