Tài liệu Handbook of Organizational Behavior pdf

PUBLIC ADMINISTRATION AND PUBLIC POLICY A Comprehensive Publication Program Executive Editor Professor of Public Administration and Public Policy School of Public Affairs The Capital C

Public Administration and Public Policy/87

Handbook of Organizational

Behavior

PUBLIC ADMINISTRATION AND PUBLIC POLICY

A Comprehensive Publication Program

Executive Editor

Professor of Public Administration and Public Policy

School of Public Affairs The Capital College The Pennsylvania State University-Harrisburg

Middletown, Pennsylvania

1 Public Administration as a Developing Discipline (in two parts), Robert T Golem-

2 Comparative National Policies on Health Care, Milton I Roemer, M.D

3 Exclusionary Injustice: The Problem of //legally Obtained Evidence, Steven R Schles-

4 Personnel Management in Government: Politics and Process, Jay M Shafritz, Walter

5 Organization Development in Public Administration (in two parts), edited by Robert T

6 Public Administration: A Comparative Perspective, Second Edition, Revised and Ex-

7 Approaches to Planned Change (in two parts), Robert T Golembiewski

8 Program Evaluation at HEW (in three parts), edited by James G Abert

biewski

inger

Golembiewski and William B Eddy

panded, Ferrel Heady

Revised and Expanded, Jay M Shafritz, Albert C Hyde, and David H Rosenbloom

11 Changing Bureaucracies: Understanding the Organization Before Selecting the Ap- proach, William A Medina

12 Handbook on Public Budgeting and Financial Management, edited by Jack Rabin and

Thomas D Lynch

13 Encyclopedia of Policy Studies, edited by Stuart S Nagel

14 Public Administration and Law: Bench v Bureau in the United States, David H Rosen-

15 Handbook on Public Personnel Administration and Labor Relations, edited by Jack

16 Public Budgeting and Finance: Behavioral, Theoretical, and Technical Perspectives,

17 Organizational Behavior and Public Management, Debra W Stewart and G David

18 The Politics of Terrorism: Second Edition, Revised and Expanded, edited by Michael

20 Organization Theory and Management, edited by Thomas D Lynch

23 Making and Managing Policy: Formulation, Analysis, Evaluation, edited by G Ronald

bloom

Rabin, Thomas Vocino, W Bartley Hildreth, and Gerald J Miller

Third Edition, edited by Robert T Golembiewski and Jack Rabin

Garson

Stohl

edited by Jack Rabin and James S Bowman

Gilbert

24 Public Administration: A Comparative Perspective, Third Edition, Revised, Ferrel

25 Decision Making in the Public Sector, edited by Lloyd G Nigro

27 Public Personnel Update, edited by Michael Cohen and Robert T Golembiewski

28 State and Local Government Administration, edited by Jack Rabin and Don Dodd

29 Public Administration: A Bibliographic Guide to the Literature, Howard E McCurdy

31 Handbook of lnformation Resource Management, edited by Jack Rabin and Edward

32 Public Administration in Developed Democracies: A Comparative Study, edited by

34 Handbook on Human Services Administration, edited by Jack Rabin and Marcia B

40 Organizational Behavior and Public Management: Second Edition, Revised and Ex-

42 Public Administration: A Comparative Perspective, Fourth Edition, Ferrel Heady

and Expanded, Jay M Shafritz, Norma M Riccucci, David H Rosenbloom, and Albert

45 Public Productivity Handbook, edited by Marc Holzer

46 Handbook of Public Budgeting, edited by Jack Rabin

49 Handbook of Court Administration and Management, edited by Steven W Hays and

50 Handbook of Comparative Public Budgeting and Financial Management, edited by

52 Handbook ofAdministrative Ethics, edited by Terry L Cooper

54 Handbook of Regulation and Administrative Law, edited by David H Rosenbloom and

55 Handbook of Bureaucracy, edited by Ali Farazmand

56 Handbook of Public Sector Labor Relations, edited by Jack Rabin, Thomas Vocino,

57 Practical Public Management, Robert T Golembiewski

58 Handbook of Public Personnel Administration, edited by Jack Rabin, Thomas Vocino,

59 Public Administration: A Comparative Perspective, Fifth Edition, Ferrel Heady

60 Handbook of Debt Management, edited by Gerald J Miller

C Keamey

Cole Blease Graham, Jr

Thomas D Lynch and Lawrence L Martin

Richard D Schwartz

W Bartley Hildreth, and Gerald J Miller

61 Public Administration and Law: Second Edition, David H Rosenbloom and Rosemary

62 Handbook of Local Government Administration, edited by John J Gargan

66 Handbook of Organization Theory and Management: The Philosophical Approach,

panded, Michael L Vasu, Debra W Stewart, and G David Garson

70 Handbook of Health Administration and Policy, edited by Anne Osborne Kilpatrick and

72 Handbook on Taxation, edited by W Bartley Hildreth and James A Richardson

74 Handbook of Global Environmental Policy and Administration, edited by Dennis L

75 Handbook of State Government Administration, edited by John J Gargan

78 Handbook of Global Economic Policy, edited by Stuart S Nagel

80 Handbook of Global lnternational Policy, edited by Stuart S Nagel

81 Handbook of Organizational Consultation: Second Edition, Revised and Expanded,

85 Labor Relations in the Public Sector: Third Edition, edited by Richard C Kearney

O’Leary

ander Kouzmin

Robert T Golembiewski and Jack Rabin

Hildreth, and Gerald J Miller

James A Johnson

and Marcia L Whicker

Hoi-kwok Wong and Hon S Chan

Soden and Brent S Steel

by Jack Rabin, Gerald J Miller, and W Bartley Hildreth

edited by Robert T Golembiewski

Michael K Hooper, and Judy H Schmidt

Terry L Cooper

by Robert T Golembiewski

i

Additional Volumes in Preparation

Handbook of Public Quality Management, edited by Ronald J Stupak and Peter M Leitner

Handbook of Crisis and Emergency Management, edited by Ali Farazmand

Handbook of Public Management Practice and Reform, edited by Kuotsai Tom Liou

Handbook of Comparative and Development Public Administration: Second Edition, Revised and Expanded, edited by Ali Farazmand

Principles and Practices of Public Administration [on-line text], edited by Jack Rabin,

Public Administration: A Comparative Perspective, Sixth Edition, Revised and

Expanded, Ferrel Heady

Principles and Practices of Public Administration [on-line text], edited by Jack Rabin, Robert Munzenrider, and Sherrie Bartell

ANNALS OF PUBLIC ADMINISTRATION

1 Public Administration: History and Theory in Contemporary Perspective, edited by

2 Public Administration Education in Transition, edited by Thomas Vocino and Richard

3 Centenary lssues of the Pendleton Act of 1883, edited by David H Rosenbloom with

4 Intergovernmental Relations in the 198Us, edited by Richard H Leach

5 Criminal Justice Administration: Linking Practice and Research, edited by William A

Heimovics

the assistance of Mark A Emmett

Jones, Jr

This Page Intentionally Left Blank

Library of Congress Cataloging-in-Publication Data

Includes bibliographical references and index

ISBN 0-8247-0393-6 (alk paper)

Marcel Dekker, Inc

270 Madison Avenue New York, NY 10016

The publisher offers discounts on this book when ordered i n bulk quantities For more information, write

to Special Sales/Professional Marketing at the headquarters address above

Copyright 0 2001 by Marcel Dekker, Inc AI1 Rights Reserved

or mechanical including photocopying, microfilming and recording or by any information storage and retrieval system, without permission i n writing from the publisher

Current printing (last digit):

This Page Intentionally Left Blank

Preface to the Second Edition

Preparing any book to go into a second edition is much like welcoming home a child now grown, who left home to find a personalized way of life, has found a measure of success, and who will soon leave again to face new experiences The editor, like the parent, is at once de- lighted, proud of the success, and ready to do almost anything to prepare the returnee for another tussle with the world

And so it is, substantially, with the Hurzdbook of 0rgani:ational Behavior There is in this editor some satisfaction that one offspring has done well enough, a bit of pride in my share

of helping to prepare the offspring for that first venture into the work a much bigger sense that many others were also involved in that preparation, and a deep sense that one should not overly tinker with the returning offspring

But there also are major senses in which the second edition of a book is quite unlike the returning adult child Basically, there is the opportunity for redesign: to save that which

‘‘worked,’’ to put aside the dated or less useful, and to seek to add value by a reasonably judicious commission of new pieces

The second edition, in sum, must deal with aspects of a kind of personality in the first edition There are real challenges, defenses, and even costs in tinkering with that original person- ality, and there exist real limits on how even the less satisfactory developmental features of the first volume can be improved, without jeopardizing the sense of the original volume After all, the first edition had considerable success, which is not risked with impunity

Fortunately, the metaphor above has its very real limits The whole enterprise of a second edition is far less constrained than responding constructively to a child now grown Indeed, properly viewed, the effort is liberating, and perhaps even empowering Basically, doing it again provides much room for trying to improve the breed

As it worked out, this second edition differs in marked ways from its predecessor, but it retains clear elements of the kinship; 24 of the 29 total contributions were newly commissioned for this edition, and others have been so substantially revised and updated as to warrant a clear claim for a new identity At the same time, six of these 28 contributions in the present edition appear virtually as they were, with such minor modifications as to be near reprints of what appeared before They can be considered oldies but goodies

Moreover, the character of the authorship remains essentially the same as in the 1993

edition, even though many-almost two-thirds-of the authors are new to this edition The

vi Preface to the Second Edition

contributors include some ofthe world’s most senior and well-known scholars, as well as several

relative newcomers and those i n between This is as much by design in this edition as it was

in its predecessor: the “community of scholars” is an ideal toward which I consciously try to

work and such a community requires (among other features) various ways of assuring an effec-

tive transmission or diffusion of ideas and standards of truth A population of diverse ages is

one way to provide linkages for such academic communities as that of organizational behavior The basic theme of differences within similarities can be extended Thus despite a few

failures to arrange for all the desired reflections of the perspective, this second edition is clearly

and more determinedly comparative than its predecesor This is true of the contributions as a

whole, as well as of emphases within many individual contributions

“Comparative” has multiple meanings, of course It can relate to intercultural compari- sons, those between nation states, or those between individual organizations At any level, “com-

parative operational analysis” also looms larger here This refers to the substantial attention to

differences in operational definitions that in the short run may do more to determine mixed or

inconclusive research in findings than the complexity or nonlawfulness of relationships in nature

In another particular this second edition is exactly like its predecessor Sandra Daniel

contributed to the preparation of this edition in major ways-handling the assemblage of often

variegated contributions and dispatching the many details generated by preparing that assem-

blage for the publisher

Robert T Golenlbiervski

c

Preface to the First Edition

plementary volumes and seeks a distinctive niche In part, this targeted niche involves an ap- proach to the field of organization behavior (OB) as a market and thus encourages the search for ways and means to fully utilize the available supply of good work and trained OB researchers

A better balance with the supply side will result largely from increasing the demand for standard

OB services and insights However, this volume also emphasizes areas and themes to which

OB can give added or even relatively novel attention, with value to OBers as well as to users

of their thought and research The Introduction details this volume’s sense of OB as a market and identifies numerous contributions to this volume that seek to increase the demand for what

OB can offer

To a greater extent, however, this handbook will gain its distinctiveness from the covey

of authors whose efforts fill these pages On perhaps too many occasions, I shared with the authors my expectations of their work: “Nothing less than the effort to write the best essay of your lives.” This was said in a playful and even joking manner, for I do not believe that anyone has great control over what eventuates in a “career best,” or “less than a career average,” for that matter Nonetheless I believe the authors took my whimsicality in deadly earnest and I am more pleased about that than I can say The list of contributions contains more than the normal representation of career bests or excellent performances

Perhaps more than distinctiveness, another D-word-diversity-dominates in this vol- ume That characterization applies to the selections of authors-in their training, present organi- zational affiliations, and public or business sector of primary concern Diversity also applies to the form and manner of development of these contributions The targeted areas differ in terms

of method and stage of development, as well as their presently perceived relevance to OB as

a field, hence the corresponding range of textures and treatments in this volume

Paramountly, the handbook seeks diversity in its usefulness I hope that the volume will

be helpful across the full range of settings within which OB has an established presence, perhaps opening up new avenues of thought and knowledge This range encompasses: business schools and public management; various professions where OB is relevant, such as nursing and educa- tion; as well as in the traditional fields in which OB finds a more or less secure home-primarily sociology, industrial and occupational psychology, management and human resources

As usual in such editorial efforts, I find myself learning so much from the authors that I

vii

W11

Preface to the First Edition

know I can never repay them-either in words or in editorial embellishn1ents"for their gener- ous giving of themselves I find myself unsuccessfully seeking augmented ways to share with the authors the sense of completion and anticipated contributions Failing that, let me acknowl- edge my ineluctably symbiotic role in the enterprise-that of vetting the information and insight that the authors will bring to many readers This vetting also probably had more potential for

complicating the lives of the authors than for enhancing their contributions

Special thanks go to two people, who i n different ways facilitated the production of this volume: Sandra Daniel handled the many typing and clerical issues, and Robin Fayman provided useful and appreciated services l'rom the publishing side

Robert T Golembien ski

b

Contents

Preface to the Second Edition

Preface to the First Editiorz

Stevan E Hobfoll and Arie Shirorn

Small Group Research: Autonomous Teams and Progress on Issues of

C l a m W Langfred and Murk T Shanley

Organizational Culture: It's Alive! It's Alive! But There's No Fixed

Robert G Isaac and Dorrglus C Pift

William B Stevenson

X Contents

9 Surveying Organizational Structures and Human Resource Practices:

The National Organizations Study

Peter V Marsden, Arne L Kulleberg, arld David K m k e

10 Risk Taking in Organizations

Research on Race and Ethnicity: An Update and Analysis

Taylor Cox, Jr., Stella M Nkomo, and J u l i a Welch

Human Factors in Information Systems

G Da1ic-l Garson

Psychological Burnout in Organizations: Research and Intervention

Ronald J Burke arid Astrid M R i c l m d s e n

Managing Organizational Conflict: Challenges for Organization Development

and Change

M Afzalrlr Rcrllim

Entrepreneurial Phenomena in a Cross-National Context

Urs E Gattiker culd Jolm Parm U11@i

Work-Family Role Conflict and Employer Responsibility: An Organizational

Analysis of Workplace Responses to a Social Problem

Paul M Roman and T e r n > C BIwn

Management Training and Development

Dorothy Olslzfski and Debordl A m Crrtchirz

Valuing Diversity in a Global Economy: The Sad State of Organizations

and Gender

Allan R Cahoon and Julie I A Rortwey

Part 111 Some Themes with Great Potential

20 Wisdom’s Critical Requirement for Scientific Objectivity in Organizational

Behavior Research: Explicit Reporting of Researcher Values

Gordon A Walter

2 1 Postmodernism: Implications for Organization Theory’?

Dale “Skip” Nert$er,g

22 Behavioral Research in Auditing: A Review and Synthesis

A Positive Revolution in Change: Appreciative Inquiry

David L Cooperrider and Diana Whitrtey

Paradigms in Organizational Change: Change Agent and Change Target

Perspectives

Achilles A Armenakis, Sturlley G Harris, and Hubert S Feild

Compensation: Trends and Expanding Horizons

Elizabeth M Doherty and Walter R Nord

A Way Out of No Way? Strategy, Structure, and the "New Governance''

Robert F Durant

A New Perspective on Organizing in Industry

John P a m Ulh@i, Urs E Gattiker, and Irlger Bojsen

Transcending Cultural Boundaries for Human and Organization Development:

Experiences of International Exchanges Between India and the United States

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Contributors

Achilles A Armenakis, D.B.A Professor, Department of Management, Auburn University, Auburn, Alabama

Terry C Blum, Ph.D Georgia Institute of Technology, Atlanta, Georgia

Inger Bojsen, M.Sc Research Fellow, Department of Organization and Management, The Aarhus School of Business, Aarhus, Denmark

Ronald J Burke, Ph.D Professor, Schulich School of Business, York University, Toronto, Ontario, Canada

Allan R Cahoon, Ph.D Professor and Director Olade Project The University of Calgary, Calgary, Alberta, Canada

David L Cooperrider, M.S., Ph.D Associate Professor and Chair, Social Innovation in

Global Management for Human Cooperation and Global Action (SIGMA), Department of Or- ganizational Behavior, Weatherehead School of Management, Case Western University, Cleve- land Ohio

Taylor Cox, Jr., Ph.D Associate Professor, Department of Organizational Behavior and Hu- man Resource Management, University of Michigan Business School, Ann Arbor, Michigan

Deborah Ann Cutchin, Ph.D Cutchin and Associates, Monmouth Junction, New Jersey

Ronald A Davidson, Ph.D Associate Professor, School of Management, Arizona State Uni-

versity West, Phoenix Arizona

Elizabeth M Doherty, Ph.D Management and Information Systems, St Joseph’s University, Philadelphia, Pennsylvania

Robert F Durant, Ph.D Henry A Rosenberg Professor of Public, Private, and Nonprofit Partnerships, School of Public Affairs and Schaefer Center for Public Policy, University of

Baltimore, Baltimore, Maryland

Hubert S Feild, Ph.D Torchmark Professor, Department of Management, Auburn Univer- sity, Auburn, Alabama

xiii

xiv Contributors

G David Garson, Ph.D Professor, Department of Political Science and Public Administra-

tion, North Carolina State University, Raleigh, North Carolina

Urs E Gattiker, Ph.D Obel Family Foundation Professor of Technology and Innovation

Management, Department of Production Aalborg University, Aalborg, Denmark

Robert T Golembiewski, A.B., M.A., Ph.D., Ph.Sc(Hon) Research Professor of Manage- ment, Department of Political Science, The University of Georgia Athens, Georgia

Stanley G Harris, Ph.D Associate Professor, Department of Management Auburn Univer- sity, Auburn Alabama

Stevan E Hobfoll, Ph.D Professor and Director, Applied Psychology Center, Kent State

University, Kent, Ohio

Robert G Isaac, B.Sc., M.B.A Instructor 11, Department of Human Resources and Organiza- tion Dynamics, The University of Calgary, Calgary, Alberta, Canada

Uma Jain, Fellow, IIMA President, Nexus for Consulting in Self and Systems Development, Ahmedabad, Gujarat, India

Arne L Kalleberg, Ph.D Kenan Professor, Department of Sociology, University of North

Carolina, Chapel Hill, North Carolina

Martin Kilduff, Ph.D Professor of Organizational Behavior, Department of Management and Organization The Pennsylvania State University, University Park Pennsylvania

David Knoke, Ph.D Professor, Department of Sociology, University of Minnesota, Minne-

apolis, Minnesota

Karl W Kuhnert, Ph.D Associate Professor and J.W Fanning Leadership Institute Senior Research Fellow, Department of Psychology, The University of Georgia, Athens, Georgia

Claus W Langfred, Ph.D Assistant Professor of Organizational Behavior John M Olin

School of Business, Washington university, St Louis, Missouri

Paul R Lawrence Donham Professor Emeritus of Organizational Behavior, Graduate School

of Business Administration, Harvard Business School, Boston, Massachusetts

Edwin A Locke, Ph.D Professor, R H Smith School of Business, University of Maryland

at College Park, College Park Maryland

Peter V Marsden, Ph.D Professor, Department of Sociology, Harvard University, Cam-

bridge, Massachusetts

Dale “Skip” Newberg, M.A., M.S.O.D.-F Lecturer, Pepperdine University-GSEP, Malibu,

and Vice President Century 21 Real Estate, Culver City- California

Stella M Nkomo, Ph.D Professor, School of Business Leadership University of South Af-

rica Pretoria, South Africa

Walter R Nord, M.S., Ph.D Professor, Department of Management, University of South Florida, Tampa, Florida

-1 Deceased

c

Contributors xv

Dorothy Olshfski, Ph.D Associate Professor, Graduate Department of Public Administration, Rutgers University, Newark, New Jersey

Douglas C Pitt, Ph.D Professor, Department of Human Resource Management, University

of Strathclyde Glasgow, Scotland

M Afzalur Rahim, Ph.D President, Center for Advanced Studies in Management, Bowling Green, Kentucky

Hal G Rainey, Ph.D Department of Political Science, The University of Georgia, Athens, Georgia

Astrid M Richardsen, Ph.D Associate Professor, Department of Psychology, University of

Tromso TromsQ, Norway

Paul M Roman, Ph.D Research Professor of Sociology, Institute for Behavioral Research, The University of Georgia, Athens, Georgia

Julie I A Rowney, Ph.D Professor, Faculty of Management, The University of Calgary, Calgary Alberta, Canada

Mark T Shanley, Ph.D Professor, Department of Strategic Management, Krannert Graduate School of Management, Purdue University, West Lafayette, Indiana

Arie Shirom, Ph.D Professor, Faculty of Management, Tel Aviv University, Tel Aviv, Israel

William B Stevenson, Ph.D Associate Professor, Organization Studies Department, Boston College Chestnut Hill, Massachusetts

John Parm Ulhoi, Ph.D Professor, Department of Organization and Management, The Aar- hus School of Business, Aarhus, Denmark

Gordon A.Walter, Ph.D Associate Professor, Faculty of Commerce and Business Adminis- tration, University of British Columbia Vancouver, British Columbia, Canada

Myron L Weber, Ph.D Associate Professor, Faculty of Management, The University of

Calgary Calgary, Alberta, Canada

Julia Welch, B.A Department of Organizational Behavior, University of Michigan Business School, Ann Arbor, Michigan

Diana Whitney, Ph.D President, Corporation for Positive Change, Taos, New Mexico

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Introduction

Fitting a Market Metaphor to Organizational

Behavior

The University of Georgia, Athens, Georgia

A handbook of even the grandest ambitions cannot encompass “all of it,” and so it is with the present example of the genre, which deals with organizational behavior, or OB The implication

is direct: selective criteria have to occupy a prominent place in the design of such a volume Some topics have to receive emphasis; and, perforce, other topics-usually many other reason- able topics-have to be neglected This introduction provides two perspectives on this direct implication

I OB as Rings of Development

First, and briefly, this handbook views OB in idealized form as a set of more or less concentric growth rings At its heart, as it were, OB’S foundations consist of relatively specific empirical findings and normative guides Here some existing emphases have achieved a substantial stage

of development: let us call them wheelhorse items This status not only finds these themes already contributing to theoretical networks of some comprehensiveness, this core also is gener- ating spin-offs for testing empirically and by experience, while at the same time providing support for themes encouraging promise of far more to come The latter may be called real or potential cutting edges of the discipline, whereas the wheelhorse themes reflect the accepted work that has been going on in the discipline for some time

Or if the reader prefers, OB can be viewed in terms of three zones-as core, already useful peripheries, and promising but underexplored outer rings, as i t were This core will soon enough collapse on itself, absent such attempted extensions A useful core will generate an active periphery, thereby attracting attention, loyalties, and skills Absent such a core, spin-offs will soon spin out, and thereby lose the enthusiasm and energy such attempts imply

In sum, a robust OB should direct developmental attention to two classes of themes in addition to those categorized as wheelhorses, if only for now Some of these rising themes should already show substantial results, although far more extensive developments are needed before solid judgments can be made about their contributions to tomorrow’s OB foundations

In addition, a useful OB concept should encompass themes that reflect promise but have received only early rounds of attention These latter two categories of themes possibly may serve as

7

of topics on the apparent rise Parts I1 through IV list in turn the contributions in this handbook

in those three classes of OB seen as ideally dynamic systems

II OB’s Market Environment: An Overview

To further circumscribe OB, this introduction elaborates a “market” metaphor To varying degrees, three purposes stand out most prominently

Quite directly, the market metaphor-even if only gently-provides a template for helping choose the topics that get attention below

In addition, the metaphor as well as the details of its elaboration imply a profile for this handbook that relates both to how the volume distances itself from other efforts of its kind as well as to how the book is like other such efforts in some particulars

Finally the market metaphor implies conceptual pathways for the future development of

OB This is the most expansive ambition and also the most problematic, because OB’S future

is at a critical stage in its shaping In attempts to build on those yeasty early days in the 1950s

and 1960s when business schools began in a big way to fill a major gap in their faculties by hiring behavioral scientists from various loci-psychology sociology, education, and political science, in the main-OB has had a curiously self-defeating history Its subject matter tends to attract far more than its fair share of gifted students and the methodological and substantive training of individuals with masters’ degrees or doctorates clusters in the range from very good

to superb, but OB seldom provided a seller’s market in academia business, and government

In short, the supply of OBers grew i n both numbers and quality, but the demand side was too sluggish to absorb the supply, let alone to create a seller’s market

Let me quickly note a caveat The description above requires a bit of balancing, or putting

in perspective Note that the job prospects for OBers are not, and never were as dismal as those widely attributed to those gaining recent doctorates in English Nonetheless, the imbalance between supply and demand was often felt Certainly, that is to say, OBers have never experi- enced the buoyant market that exists for some professionals (e.g., the great shortfall of accoun- tants with doctorates having an interest in teaching jobs in schools of business or in public administration programs)

OBers did not always take this situation with equanimity At times, in fact, some OBers turned into raiders For example, some OBers-largely trained in business schools-sought to extend their domain into public administration programs I applauded that effort for several reasons, primary among them being the fact that the raiders were generally superior i n training

to the retrofitted political scientists who filled most public administration posts having an OB content OBers also filled many similar posts in other specialized turfs-hospital management, education social work, hospitality, and so on-and more power to these raiders, although only the best of them sought to gain the sense and feel of (for example) public sector institutions and traditions Some curious overexuberances resulted, as in the elemental neglect of the fact that separate congressional committees typically deal with substantive and appropriations issues

in both houses of Congress This can powerfully complicate getting public initiatives started, and especially so for the unwary

Introduction 3

Similarly OBers have made definite forays into organization development, or OD To

me, this was a very mixed effort On the one hand, OBers often had superior methodological skills, and this served important purposes in the maturation of OD as a field, especially in terms

of research On the other hand, however, OBers often did not have the values or interventionist skills long associated with OD, and those deficiencies had some very unattractive features In the worst case, in opposition both to internalizing those values and to seeking to gain those skills for interventions, OBers sought to redefine the essentials of OD to their own preexisting skills and tastes Bottom line, this editor concludes, this induced more consternation and conflict than progress At best, a lot of rediscovering of the wheel became necessary for OBers as in

the case of truncated versions of total quality management programs for the purpose of organiza- tional change

This thumbnail OB history has a major implication for dealing with a focal issue-on how to minimize the potential for failure in success Directly, this handbook focuses on how the demand for OB and OBers can be enhanced In contrast, the dominant style of response to the oversupply of OBers has been to control the supply side of the equation-as by limiting admissions to OB programs The approach differs here It seeks to meet OB needs by expanding the demand for OB and OBers

111 Affecting OB on the Demand Side

The ways in which this handbook seeks to improve OB’s life chances on the demand side are illustrated by the three classes of OB topics focused on below:

Traditional wheelhorse topics or themes

Recognized topics that merit enhanced attention

Emerging but incompletely developed topics

Briefly, these three classes of topics relate to the kinds of development distinguished above: a central core, already productive but underrecognized additions to the core (or extensions

of it), and topics likely to enrich OB’s longer-run future but presently still at early stages of

development

A Traditional or Wheelhorse Topics

Table 1 suggests that the topics in the core have three distinctive features that all contribute to

an increased demand for OB First, the topics command broad agreement that they are strategic and critical, hence any degree of success in dealing with them implies a direct payoff of height- ened demand for OB talent, time, and perspectives

Second, all of the topics today reflect a mixed bag of results As the authors of all of the contributions in Table 1 establish in various ways, some central tendencies in results exist, and these contribute positively to OB demand In addition, however, analyses associated with all

of the wheelhorse topics show that attempts to test associations tend to generate a mixed pattern

of results in bivariate analyses At times the available evidence supports a direct association between many pairs of variables Then again, other evidence encourages the conclusion that a

mixed association exists, and in some research the variation seems essentially random Whatever the pattern of associations, clear possibilities for increasing the demand for OB exist, thus any consistently positive findings clearly have that effect Moreover, unless cynicism sets in, the mixed results also justify increased demand because the required clarifications consti- tute the critical tests of OB’S reach and grasp, and in effect exploit sunk investments Tests of

The Contingency Approach to Organizational Design Paul R Lawrence

Motivation by Goal Setting Edwin A Locke

Stevan E Hobfoll and Arie Shirom

Small Group Research: Autonomous Teams and Progress on Issues of Context and Levels of Analysis, Claus W Langfred and Mark T Shanley

Organization Culture: It’s Alive! It’s Alive! But There‘s No Fixed Address! Robert G Isaac and Douglas C Pitt

Surveying Organizational Structures and Human Resource Practices: The National Organizations Study, Peter V Marsden Arne L Kalleberg, and David Knoke

Leadership Theory i n Postmodernist Organizations Karl W Kuhnert

the mixed associations in effect constitute a key measure of how much more OB can contribute

to strategic and critical issues Finally if verified even consistently random associations can demonstrate the power of OB Clarity about what relationships do )lot exist constitutes pretty powerful stuff

Third the working suspicion of this editor about the prime reason for the mixed bag of results also implies a major expansion in the demand for OB and OBers Specifically a substan- tial part of the mixed record in isolating regular empirical associations seems to me to derive from pervasive differences in operational definitions tt comes as no great surprise that different measures might well account for the typically diverse patterns of association isolated in numer- ous tests of any pair of covariants: positive associations in some cases, negative associations

in other cases, and no drift one way or the other in still other cases

Miller and Friesen generalize the point (1984: 14-15) in emphasizing that the comn1on failure to distinguish different “configurations” of organizations in research populations reason- ably results in mixed results They note that theoreticians distinguish various numbers and kinds

of configurations; thus Mintzberg ( 1984) isolates five, Golembiewski ( 1987) focuses on four, and so on Researchers generally fail to distinguish different configurations of organizations in any research population however, and this failure has a highly probable effect As Miller and Friesen conclude ( 1984: 14- 1 5 )

kinds of organizations were mixed in research samples and then relationships gauged among [various covariants]? We believe that we already have the answer [in the apparently conflict- ing research findings] cited earlier

This probable condition suggests a substantial potential for increased demand for OB

Numerous sectors of the OB literature are now at the point at which more focused attention on distinguishing operational definitions might generate major breakthroughs This is the sense of

my earlier call (Golembiewski, 1986: 298-300) for a Manhattan Project in the organization sciences to make the critical choices between numerous alternative operational definitions, with any closure toward preferred definitions being central in clarifying presently mixed evidence concerning many associations in OB (e.g in the patterns of linkage between cohesiveness and consistent productivity) Consistent failure in such a wide-reaching enterprise to generate ex- panding networks of regularities would imply that nature is random, chaotic, or very complex

Introduction 5

The general point is widely emphasized in the abstract, but detailed attention is i n short supply to its ramifications in designing and interpreting research, or at least so it seems to this editor I have hence emphasized in detail the point in its subtle and gross aspects-early (Golembiewski, 1962) in the mid-period of my career (1986), and quite recently, along with numerous colleagues, I have devoted much effort to detailed research with specific operational definitions (e.g., Golembiewski et al., 1996)

This pointing with alarm and showing the way have not yet won the day Indeed, many OBers have blithely skidded past the real possibility that differences in operational definitions are crucial and at least some influential observers of this “stuckness” of OB conclude that it reflects the recalcitrance of behavioral realities, if not their basic unlawfulness A heightened and focused demand for OB to compare alternative operational definitions is key, then, providing perspective on whether the problem really is in nature This editor definitely inclines toward the view that our too frequent casualness about differing operational definitions is by far the most useful explanation of the cacophony of findings often observed in OB

B Topics Meriting Enhanced Attention

As Table 2 shows, this handbook also gives illustrative attenlion to an array of topics or themes that have been recognized but in effect still require major pushes to exploit their fuller potential Any successful “pushes,” of course, will heighten the demand for OB and OBers

Many reasons explain this shortfall of attention, as several of the contributions in Part I1 emphasize Fashions or fads play a role, the difficulties of some specific kinds of research prior

to the broad availability of advanced systems for electronic data processing often played an important role, and human wit and will also have fallen short

C Awkwardly Neglected Topics

Finally, Table 3 lists a number of areas that seem prime contenders for enhanced OB attention The list is harsldy selective, of course, but well represents the far broader range that might have been given attention In sum, Table 3 focuses on a broad range of themes-from compensation through technology-and includes the key role of values, among several other emphases

To the degree that new or enhanced attention gets directed at topits such as those in Table

3, of course, so also will the demand for OB inputs increase Not all of the table’s themes will necessarily prove to be winners, but their aggregate potential for enhancing demand for OB and OBers appears substantial

Table 2 Some Thetnes Requiring Enhanced Emphasis

M Richardsen

Managing Organizational Conflict: Challenges for Organization Development and Change M Afzalur Rahim

Entrepreneurial Phenomena in a Cross-National Context, Urs E Gattiker and John Parm Ulhdi

Management Training and Development Dorothy Olshfski and Deborah Ann Cutchin

Valuing Diversity in a Global Economy: The Sad State of Organizations and Gender Allan R

Postmodernism: Implications for Organization Theory? Dale “Skip” Newberg

Hegemonic Masculinity and Organizational Behavior Martin Kilduff

A Positive Revolution in Change: Appreciative Inquiry, David L Cooperrider and Diana Whitney

Paradigms in Organizational Change: Change Agent and Change Target Perspectives, Achilles A

Armenakis, Stanley G Harris and Hubert S Feild

A Way Out of No Way?: Strategy, Structure and the “New Governance,” Robert F Durant

Bojsen

International Exchanges Between India and the United States, Uma Jain

References

Golembiewski, R T (1986) Organization analysis and praxis: Protninences of progress and stuckness

In Review of Industrial 0rgani:atiortnl P~~c holog y (C L Cooper and 1 Robertson eds.), Wiley

London pp 279-304

ture and how to do so I n A Centerrrtiul HiAtory qf the Arnericarz Adwinistrulive Stute (R C Chandler

ed.), Free Press, New York, pp 433-474

eds.) Prentice Hall, Englewood Cliffs, N.J pp 68-86

l

The Contingency Approach to

Organizational Design

Paul R Lawrence

Harvard Business School, Boston, Massachusetts

It is now an established part of organizational theory that different kinds of organizations are needed to perform different kinds of tasks-there is no one best way to organize This was not true some thirty years ago when theory was still searching for the all-purpose organization The change has been brought about by contingency theory Many scholars contributed to the origin

of the contingency approach to organization design and many more have subsequently developed it.* It remains the dominant approach to organization design

This chapter will provide an overview of the current state of contingency theory as it bears on the practical topic of organization design It will review the key concepts utilized by the theory, it will spell out the specific critical contingencies the theory deals with in the design

of a business unit, and finally it will describe how the theory treats design as an organization moves through the life cycle from start-up to large-scale maturity

relevcrrzt environment These environmental elements carry characteristics that can be studied

and analyzed These features point the way to the nature of the key tasks that must be performed

to deal with this environment-what is to be designed, what is to be made and how, and what

is to be exchanged and with whom The choice of strategy and environment thus sets the stage for starting the organizational design process It allows the designer to analyze the diversity and the uncertaitlty in the relevant environment and make an initial assessment of the appropriate internal diferentiation to create an appropriate division of labor It permits the designer to assess the interdependence between key tasks and therefore the needed integrutiofz between organiza- tional parts These are the central concepts that will guide the process of designing the elements

Lorsch (1967) Fred Feidler first used the same term in respect to leadership (1967)

7

8 Lawrence

of an organization, its stnrctwe' its s y s t e m , and its sta@ng, so that it fits its environment, and

as a result will be ejkctive in performing its key tasks

II Specific Critical Contingencies

Research over the years since the start of contingency theory has developed a set of critical contingencies with which organizations need to be designed to cope The contingency of size has been primarily associated with the Aston research group (e.g., Pugh et al., 1968; Greiner, 1967) The contingency of scale and scope has been most explored by Chandler (1962), Lorsch and Allen (1973), Rumelt ( l 974), and Porter (1980) The contingency of uncertainty is associated with Burns and Stalker ( 1 961) and Lawrence and Lorsch (1967) and the contingency of individ- ual predispositions with Vroom ( 1960) and Turner and Lawrence (1965), as well as Lorsch and Morse (1974) The contingency of technology and geography is associated primarily with the work of Woodward ( 1965), Thompson (1967), Perrow ( 1967), and Gailbraith (1973) The con- tingency of resource dependency is associated mainly with Pfeffer and Salancik (1978) and Lawrence and Dyer ( I983), and the contingency of time with Rice ( 1963), and the contingency of national differences with Hofstede (1980), Bartlett and Ghoshal(1989), and Nohria and Choshal (1997) Other scholars have taken up lesser contingencies, but no others have been shown to have sufficient impact on organizations to warrant inclusion in this chapter

111 Designing the Single-Product Firm

We will start by elaborating on how the critical contingencies bear on the design decisions in

creating a freestanding single-product firm For purposes of a clear example let us address the design of a shoe company

As an initial step it would be wise to calculate the minimal size of the firm that would

be needed to achieve enough volume to realize reasonable economies of scale The other aspect

of the size issue is scope in terms of the breadth of product line and of market coverage The next step is to plan for the basic functional departments To be in the shoe business, even i n a minimal way, our hypothetical shoe firm must design, manufacture, and sell shoes These three basic functions are in some form the initial units that are differentiated In order

to perform these three tasks in the most effective way should we organize and operate each department in the same way or are differences needed? The answers depend on the amount of

uncertainty each department will need to face

A Differentiation

Assuming that we are entering the fashion end of the ladies shoe business, i t would be clear that our design department will need to cope with the considerable uncertainty of the fickle world of rapidly changing tastes In contrast, our production department will be dealing in the relatively stable world of raw materials and production machinery The sales department will probably be dealing with the moderately uncertain world of department stores and discount and outlet stores as well as the traditional specialized shoe store

These differences in the uncertainty found in these environments call for different organi- zation forms in order to be effective To cope with its stable environment it would be appropriate for the production shop to be centralized with formalized procedures, clear-cul shop rules and

a strong chain of command The rules and procedures can be specified in advance and will be

The Contingency Approach 9

useful for an extended period of time Only a limited number of decisions need to be made to keep up to date with the slow rate of change in its relevant environment Managerial costs can

be kept relatively low

In contrast, the design shop cannot expect to follow predetermined rules Things change too quickly to keep rules up to date Here a more flexible organization is called for so that people can communicate in all directions to pick up current market tips and respond quickly

to changing circumstances More people need to be watching the fashion world and deciding how to respond The design unit's structure needs to be more of an all-to-all communication network rather than a hierarchy of command Joint problem solving is the style rather than giving and executing orders In addition, it would be expected that the design department will give priority to achieving quality goals even as the production department will give priority to meeting cost objectives In some situations departments would need different time orientations (from long to short term), but we would not expect significant differences in this dimension in

the shoe business

Various terms have been used to describe the contrast between our hypothetical design and production departments (e.g., organic vs mechanistic, participatory vs autocratic, formal

vs informal) These terms define the end points of a continuum of ways of organizing the needed subsystems The sales department could be expected to function best if it fell in the middle of this continuum between the two contrasting organizational forms of the design and production departments

The second major contingency that our designer needs to deal with is the people factor- people are not all alike People with different predispositions find themselves comfortable in

one of these work settings and not in the other The people who would be more comfortable

in the manufacturing setting would have low tolerance for ambiguity and low integrative com- plexity, and a preference for working in teams and for strong authority relations The people who would be more comfortable in the design department would have opposite preferences- high tolerance for ambiguity, high integrative complexity, and a preference for individual work independence, and autonomy The sales department could expect to attract people who are com- fortable in the middle of these ranges

B Integration

Once the three basic departments have been organized with the appropriate characteristics and staffed with people having suitable dispositions, they can be expected to be effective in their functional roles The problem of integrating the work of the three departments remains, and the very differences that made each department good at its own job will make integration difficult The differences i n style and goals between our shoe departments make it inevitable that they will be in conflict on many issues that need joint resolution For example, the design and produc- tion groups are unlikely to agree on the importance of interrupting the production flow to make

an experimental batch of shoes The path to even the best of joint decisions is usually strewn with conflict

Our organizational designer must now set up the mechanisms to secure the needed integra- tion in spite of the necessary differences Every designer would use the time-honored integrative mechanisms of assigning the three departments to a single shared boss (hierarchy) and setting

up some shared procedures (rules) These devices should be adequate if the degree of interdepen- dence is not too much and the differences to be bridged are minimal In our shoe example these conditions do not, in fact, prevail An analysis of the tasks indicates that the linkage between shoe design and both production and sales will require some complex joint coordination Design features can be expected at times to entail the use of some unusual production methods and some

10 Lawrence

unique selling techniques Likewise, the shoe designers need to draw on the sales department’s knowledge of customer preferences The designers also need to be educated by the production people about what their proposed styles will require of production in terms of costs and quality These reciprocal irzte~~lepel7ClYrzcies require more sophisticated ways to resolve conflict than interdependencies that can be handled seqrlentially or by simply drawing upon common pooled

resources

To cope with these reciprocal interdependencies in the face of significant differences additional integrating mechanisms will need to be employed Devices such as cross-functional planning teams, special liaison roles, or even a separate integrating department may be required

to effectively link the basic units To do its job properly, any integrating department should be intermediate between the design and production units i n tertns of its formalization and of its orientation to authority, complexity, individualism, goals, and time

So far we have been addressing only two of the critical contingencies for our shoe km-

task uncertainty and member dispositions Based on these contingencies we have been creating

an organization that is appropriately differentiated and integrated With this starting design we can now allow for additional contingencies

C Resource Scarcity

The organization can be expected to adjust to different degrees of resource scarcity or munifi- cence Under severe shortage of resources (loss of sales supply blockage unavailable credit, etc.), the organization can be expected to cut out postponable expenses-for instance the design

of a new line of shoes, image advertising, employee training, materials research, and experimen- tal manufacturing techniques In times of relative munificence not only would these long-term expenditures be undertaken, but, for better or worse so also would expensive member perqui- sites, institutional advertising and lobbying

D Technology and Geography

Additional contingencies come up under the heading of technology and geography An example

of technology could be visualized by the production processes for shoe uppers vs soles The uppers could be expected to be handled in batches of work in process that move from machine station to machine station for the performance of the needed operations In contrast, some of the soles might be made by a plastic molding process that is continuous Finally, the finishing and packing steps in the shoes’ manufacturing could be handled by an assembly line These three production modes can most effectively be performed by three different kinds of manu- facturing organizations The assembly line would have a wide span of control, few skilled technical and staff roles, and few levels of authority This is in contrast with the narrow span

of control and the larger technical support staff and the more levels of authority associated with continuous process technologies Batch and customized work would generally be intermediate

to these two

Another kind of technology contingency can be found in high-technology fields such as software The preparation of software programs essentially combines the design and the produc- tion functions in one, and software’s emphasis on knowledge utilization and creativity clearly calls for an organic team-based organization form

We can visualize the geographic contingency arising in connection with the sales depart- ment Let us presume that our shoe firm has decided to set up several factory outlet stores as

a way of directly selling its shoes to complement sales through department stores and specialty shoe stores Now it must face the contingent fact that its customers are widely dispersed geo-

The Contingency Approach 1 1

graphically This technical fact leads to the selection of geographically dispersed outlet stores and a corresponding direct sales organization differentiated by territory

E Second-Order Differentiation

Both technology and territory have now become the second-order form of differentiation in our production and sales departments that themselves represent a first-order differentiation by func- tion We can readily think of examples in which these contingencies of technology and territory might be of such overriding importance that they would be the basis of the first-order differentia- tion Think of the organization of any railroad-the realities of dispersed operations would indicate a first-order territorial differentiation by regions of the total area served and a second- order differentiation by function (engineering, right-of-way maintenance, train operations roll- ing stock maintenance, etc.) Likewise, the differences between the production technologies of steel-making from the blast furnace (batch) to the rolling mills (continuous process) dominate other logics of differentiation

F Support Units

Once the basic departments of our shoe firm are set up, our organization designer will need to address the design of essential support units The ones that most readily come to mind are finance and accounting, purchasing, human resources, and legal Most of these units provide linkage to other portions of a firm’s relevant environment (e.g., suppliers, banks and money markets, governmental bodies and labor markets) In addition, our shoe firm might want to add specialists with a longer-term orientation to basic units by adding some researchers to support the design group and marketing specialists to support the sales group Again we see the common theme of selecting specialists who can effectively bridge to an important part of the relevant environment with the features of each environmental sector influencing the way its associated functional unit is organized

G Power and Influence

Finally, our organization designer might make a further organizational refinement by choosing which major part or parts of the organization should be given differential weight or power in

the counsels of the firm Contingency theory clearly indicates that the rank of “first among equals” should be granted to the department that is positioned to cope with the most critical sector of the environment If securing sales, for example, is the most serious and difficult survival issue for the firm it would be appropriate to grant the sales department extra power in interde- partmental conflict resolution Having said that power and influence is best made contingent on criticality, we should add that under all contingencies it has proved best to use a problem-solving

approach to conflict resolution rather than a smoothing or a forcing approach

W Contingency and Organizational Dynamics

So far we have discussed design problems in static terms, as if we could freeze environmental conditions and design a full-blown organization from scratch This unrealistic assumption has been necessary to simplify the design problem and reach some initial solutions Now we can relax this artificial assumption and approach the design with regard to the full range of challenges organizations face at different stages of their development and at different sizes

12 Lawrence

A Start-up

Most newly formed firms need to put their organizational emphasis on flexibility to adjust quickly to their environment This means they need an organic organization form The original group of founders will be expected to be flexible about their role assignments and stay in all- to-all communication As the firm goes through its initial growth, the additional personnel will

be assigned to more defined roles and their reporting relationship to one of the founders will start creating a hierarchy and a division of labor among the original managers This will be the start of a functional organization form The resulting work groups will continue to be operating with few formal rules and will maintain lateral communication links to sustain the needed flexi- bility at this stage

B Early Growth

As organizations grow beyond the start-up stage to medium size (100 to 200 employees), they are usually able to routinize some of their operations This is needed to economize on resources This process of formalizing the organization involves several aspects One is developing role assignments for employees with clear expectations and performance feedback mechanisms The second is creating information systems that record and aggregate key operational variables Procedures must be established for order processing, work orders, order filling shipping invoic- ing, inventory control, and so on Third the chain of command will be defined and one or two additional tiers of managers will be added This process of formalization will need to be done

to achieve economies in all functions, but it should not be carried as far in departments facing environmental uncertainty as in those departments dealing with a more stable environment In this manner differentiation on the organic-mechanistic continuum will be created so that each department will have an appropriate fit with its special environmental sector

As this differentiation of form develops, it quickly creates the need for suitable integrating mechanisms that go beyond the hierarchy and shared procedures Appropriate mechanisms will need to be selected and put in place The organization that emerges from this process is the effective mature organization, performing as the freestanding single-product business described above Now we can move on to consider complexities beyond the single business unit

C Multistage Firms

As organizations grow beyond the single-product firm, they often move their operations back- ward to perform earlier steps in the value-adding production chain, or forward to perform func- tions closer to the ultimate consumer This process of organizational growth is known as vertical integration For example, our shoe firm might decide to get into the leather business and develop

a tannery to supply its shoe operations with leather This would be an example of backward integration Earlier we spoke of our shoe firm deciding to open a chain of its own factory outlet stores-an example of forward integration What guidelines exist in contingency theory for designing the appropriate organization form for performing these multiple stages of the produc- tion supply chain'?

As a general response to this question, contingency theory calls for the establishment of

separate divisions for each major step in the supply chain, with each division reporting to corpo- rate headquarters This kind of differentiation will allow each of these operations to organize

so as to fit its own environment and technology In our example each tannery and outlet store will need its own organization form and style The performance of each can then be judged by its own results

The Contingency Approach 13

We must again analyze the nature of the interdependencies between the separate divisions, however The tannery will be supplying the shoe factories which in turn will be supplying the outlet stores This represents a sequential interdependency, not as intense as the reciprocal kind discussed above, but still more complicated than a simple shared dependency on central pooled resources This kind of an interdependency can usually be handled at the home office through

a central scheduling office and through a set of ground rules for handling interdivisional pricing and quality control The upstream divisions can be treated as either cost centers using cost- based transfer prices or as profit centers using market prices This will depend on the strategic emphasis desired The downstream divisions will consistently be treated as profit centers Man- agers need to be alert to the organizational implications of a shift from one type of divisional interdependency to another For example, if our shoe division asks the tannery to develop a new type of leather finish, it is initiating a reciprocal interdependency that can best be managed

by a direct lateral dialogue between divisions

D Multiproduct Firm

The track of growth followed by other firms is the move from a single product to a multiproduct operation Tf this happens, the organization form must reflect the change in order to be effective This process is referred to as diversification In effect, the leadership of the firm is making the strategic decision to expand its environmental domain-to provide additional goods and services

to its customers The degree of diversification among products is the key to the selection and design of the effective organization form

The different products can be related to one another in several different ways The prod- ucts, to state the obvious extreme, may be entirely unrelated-their only connection being their shared financial ownership In this conglomerate situation, contingency theory calls for a mini- mal holding company headquarters The error to be avoided is overstaffing the center and over- managing the separate businesses One of the basic principles of contingency theory is that decision-making rights should be placed in the Organizational unit in which the relevant informa- tion is concentrated In our example, the relevant information about the tannery business would

be found in the tannery division-not headquarters In the case of the totally unrelated conglom- erate the only functions that can best be performed at headquarters are the financial analysis that guides investment decisions, the legal and public relations activity, and the selection and development of general managers

The choice of the family of products in the multiproduct firm can, however, lead to many kinds of relatedness that will need to be managed from the center One frequently sees a set of products that are related by sharing a base product technology This condition usually calls for

a central research and development department to serve all the separate product divisions Gen- eral Motors provides an example Another interdependence can be caused by sharing a key production facility by otherwise separate product divisions The same can be true if a field sales force is shared by otherwise separate divisions All of these examples call for combining sep- arate product divisions with one or more centralized functional units drawn on for services by all the product divisions This is often called a hybrid organization-combining the functional and the product forms This combination also presents an opportunity to adopt the matrix form

a more complex organization that will be discussed below

E Multicountry Firm

The growth drive of firms and the need to respond to global competitive challenges often leads firms to move into international markets This move, of course, represents the strategic choice

14 Lawrence

to dramatically expand the customers served by existing products and services The opportunity

of reaching new markets presents the organizational challenge of finding an effective structure

to fit these new circumstances

There are four basic multinational structural choices: worldwide product divisions, geo- graphic divisions, worldwide functional divisions, and a matrix structure that combines two or more of these dimensions There are, however, several developmental paths to these forms and numerous variations on each one

Most firms start down the road to becoming multinational by setting up an export sales office With this modest beginning, the firm looks for distributors and sales representatives in

some selected overseas area Sometimes this results in forming a joint venture with a foreign marketing organization as an alternative to simply setting up an exclusive sales contract If the business thrives, it can lead not only to seeking sales in more and more countries, but also to starting the process of moving other functions overseas (e.g warehousing assembly, and basic manufacturing units) The export sales office is apt to evolve into an international division han- dling all aspects of overseas operations This solution, however, is not apt to be satisfactory over the longer term Handling all products through the one international organization inhibits the needed differentiation of form among the different products The linkage to the domestic product divisions becomes strained With overseas growth the scale of activity can justify the choice among the four ultimate options

Contingency theory specifies that the choice among the basic forms for multinational organization hinges on identifying the most competitively critical variable, as between techno- logical leadership market responsiveness, or production scale economies (or some combination

of these) Science and technology are a universal language and if the critical competitive advan- tage is to be found in technological leadership, the organization form that fosters it is clearly the worldwide product division This form allows a focusing of product development efforts even as it provides worldwide distribution Each worldwide product division can differentiate

in ways that fit its environment General Electric is a leading example of such a firm

On the other hand, some products need to be linked tightly to the different cultural prefer- ences that exist around the world Think of fashion goods cosmetics, and so on When these market conditions are the critical competitive issue, the theory calls for the creation of a complete set of geographic divisions that span the globe, including the home country division as simply another geographic unit to be managed Coca-Cola is a leading example of such a firm Worldwide functional or process divisions are less frequently seen, and are usually found

in firms that are vertically integrated This form is indicated when the technology of each func- tion is highly specialized and permits significant economies by setting up large-scale operations

A clear example is Alcan, which has separate worldwide organizations for its chemical opera- tions, smelters, transport, fabricating units, and so on

Finally, there is the matrix option This form is fairly often used by multinational organiza- tions when the competitive environment makes two dimensions of critical importance The ma- trix form permits a dual focus It creates, for example, both product divisions and geographic divisions, with the managers in any given country responsible to both divisional headquarters

in a balanced fashion Matrix organizations permit a sharing of resources and offer more infor- mation-processing capacity, but they also are difficult to manage, and necessitate extensive man- agement training to install Dow is a leading example of a multinational matrix There are many variations of the matrix form that cannot be spelled out i n this short chapter but we should also cite the frequent use of the product/functional matrix even in firms operating entirely in the United States This organization is called for when both product market and technological excel- lence are required for competitive reasons (Davis and Lawrence, 1977)

The Contingency Approach 15

F Strategic Alliances

In the past decade a new kind of organizational development has emerged that represents a special kind of firm-a network of interorganizational strategic alliances These linkages be- tween firms go beyond the traditional buyer-seller contractual relationship They exchange more than goods for money in the spot deal of the classic market relationship They represent an enriched relationship that extends over time and that is characterized by words such as partner- ship, joint venture, consortium, and ownership linkage These linkages represent an exchange

of help in many forms It might be an exchange of product plans and market information that draws a component supplier into the design process It might be a research joint venture to speed up the development process and to share costs It might be a way of coordinating a just- in-time supply linkage It might be a joint venture to enter the newly opening markets in Eastern Europe It might be a network of small firms that develop into a regional resource in rapidly changing sectors such as microprocessors or sports clothing These networks seem to be devel- oping where flexible manufacturing methods are allowing for low-cost customized production

on a small scale Such developments also happen where information about markets, costs, and technology is widely available, allowing trustworthy relationships to evolve without expensive legal safeguards Some of these networks develop around a major firm that serves as the hub coordinator of the supply and information flows Toyota and Benetton provide examples Others are strictly small firms networked without a major hub firm Both forms are showing competitive strength More research on this newly developing form is needed to specify more clearly what contingencies make the network the appropriate organizational form

G Putting Contingency Theory in Context

Contingency theory came into being in the late 1960s at a time when the search for a universal answer to the organization design question was clearly losing steam This search for a universal design solution had been pushed to its limits by the classical school, with work started early in the century by Weber (1947), Taylor (19 l l), and Fayol (1 925) and carried on later by Urwick

( 1 944), Mooney (1937), Gulick (1937), and Koontz and O’Donnell (1955) The classical school emphasized the formal structure, using the concepts of chain of command, span of control and line and staff The antithesis of classic theory was developed by the human relations school This school of thought evolved from the late 1920s into the 1960s through the work of such leading scholars as Mayo (1 933), Follett (1940), Barnard ( I 946), Roethlisberger and Dickson (1939), Lewin (1948), Likert (1961), and McGregor (1960) The emphasis was on informal organization, group behavior, participation, and interpersonal relations Neither school was able

to gain dominance over the other The beginning of a new approach was signaled by the work

of March and Simon (1958) They in effect opened up the possibility of a more pluralistic theory without providing much guidance as to what the choice of effective forms was contingent upon Contingency theory served to provide a synthesis that was timely It was quickly established

as the prevailing paradigm Over the subsequent years the theory has at various times been challenged by newer formulations, but none has seemed to prevail The theory does suffer from some signs of aging: younger scholars show evidence of being bored by it It has, however, been widely taught and, though rather unevenly, widely practiced

Contingency theory thus continues to be the strongest research-based body of knowledge relevant to the practical problems of organizational design The basic patterns it has identified

in organizations continue to be supported by follow-on studies (See Khandwalla, 1977, and Donaldson, 1986.) It is an approach that can continue to evolve as it tracks newly developing

16 Lawrence

organizational forms such as the networks of strategic alliances Perhaps the greatest current challenge to the theory arises from the evidence that the stable environmental conditions that call for a more highly structured, mechanistic organizational form are becoming scarce This development may appear to some to be falsifying the theory, but i n all logic it does nut These developments do, however, call for a more sophisticated application of the theory

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Chandler A D Jr (1962) Struteg~~ arid Structure M.I.T Press, Cambridge

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Galbraith J R ( 1 973) Designing 01-galzi:utions Addison-Wesley, Reading Mass

Greiner L E ( I 967) Patterns of organization change H m m d Business Revietv, May-June 1 19- 130 Gulick, L ( 1937) Notes on the theory of organizations In Pupers 011 the Science of Achini~trution (L

Lawrence, P R and Lorsch, J W ( I 967) Organizution alzcl Elzviwnl~zent: Manugirzg Differetltiatioll ntld

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The Contingency Approach 17

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