Organisational theory

Organizations have existed for thousands of years and people have intuitive understanding of how organizations work (see Box 1. 2 from Handy, 1987, p. 17). The question is what makes an organization successful and another one unsuccessful? The answer may be eventually given by organizational theory that identifies, analyzes, and conceptualizes the characteristics of successful organizations. Organisations are made up of people that come together in order to fulfill specific purposes.

Organizations can be quite varied in the way they were set up: from business companies to NGOs, from partnerships to charities and government agencies. The purposes also can be extremely diverse: from selling products and services in order to make a profit and get rich to educating people and enhancing their spiritual wellfare, from medical support to teaching, from fighting pollution and injustice to campaigning for political purposes, from playing and listening to music to watching games. Organisations are social systems through which people try to fulfill their ambitions or dreams.

People form relationships that influence, for better or for worse, the development of an organisation. They like one another, hate one another, support or block one’s ideas or projects, sometimes get very personal and fall in or out of love, are motivated or on the contrary, demotivated and apathetic, are sociable or isolated, can or hate to work together. Given the existence of different stakeholder groups in organisations, it is likely that their interest will differ and that there will sometimes be tension between them.

Such tension can be destructive, but it can also stimulate creativity and help more organisations forward. Oragnisational politics These tensions within organisations are resolved through political processes which are an important part of strategic decision-making. Decisions may depend upon how much information the decision-makers have at their disposal, how well the different arguments are presented and the decion-makers’ desire to further their personal interests.

Decision-makers may also be influenced by their past. Power – the ability to get other people to do what you want even if it’s not something that they would otherwise have done. Power, politics and rationality The interplay of power and politics can result in strategic decisions that seem irrational to an outside observer. Such decisions may, however, make perfect sense to people who are conditioned to the way in which the organisation sees the world.

Bounded rationality – is a reasoning process which is not free, but shaped or determined – bounded – by factors which make particular ways of thinking about problems much more likely than others. These factors may be preconceptions, or lack of time, information or motivation to take a better decision. Most organisations acquire a set of values and assumptions about the world, their industry and their organisation that become more homogeneous over time.

This set of deeply held, often unspoken beliefs is known as the organisation’s dominant logic or paradigm or sometimes its theory-in use or organisational code. It forms a standard against which all new activities are being measured, conciously or unconciously, to determine how credible they are, or indeed whether they are to be considered at all. Organisational culture – is ‘how things are done around here’. It is what is typical of the organisation, the habits, the prevailing attitudes, the grown-up pattern or accepted and expected behaviour. (Drennan, 1992)