The Study of Organizations (RLE: Organizations)

David Dunkerley

• Publisher: Routledge
• Year: 2013
• Print ISBN: 9780415823104
• eBook ISBN: 9781135932527
• Topic: Commerce
• Subtopic: Commerce Général

In this introduction for undergraduate students, the author surveys the development of the study of organizations from an historical point of view. He studies organizations within the framework of the main schools of thought, looks into the various levels of analysis involved, and considers the influence of the environment on the organization, particularly that of technology and of other organizations.

1

The study of organizations

Introduction

The study of organizations has come to occupy a central place in the social sciences in the past few decades—so much so that there are now distinctive disciplines centred around such study. Today, most sociologists and a great many psychologists would claim at least some interest in the study of organizations. This, however, is not to say that the study of organizations is a new phenomenon in the social sciences, and in the discipline of sociology in particular. In fact, the study of organizations has a history almost as old as that of sociology itself. The ‘founding fathers’ of sociology such as Durkheim, Comte, and Spencer made clear their interest in organizations. These writers were concerned with delineating the stages of development of a society and distinguishing types of social organization appropriate to these stages.

The approach used by these early writers on organizations was soon discredited because it was quickly realized that this macroscopic level of analysis was incapable of increasing our understanding of the internal workings of the organization or of explaining the organization structure.

An understanding of the functioning and structure of organizations has thus become the primary objective of the modern study of organizations. This objective is examined from a historical point of view, showing the significant advances made in the study of organizations. It is intended that this approach will give the reader an understanding, not only of these advances, but also of the kinds of problems which still exist in the study of organizations today.

The organizational society

Organizations today are an accepted fact of life. Individuals are surrounded by organizations from the day they are born to the day that they die. The term organization covers such institutions as hospitals, schools, factories, offices, the armed forces, and so on. In modern society it is impossible to escape from the influence of organizations of one type or another. It was an awareness of this influence that encouraged the early sociologists to develop their interest in organizations. As seen already, however, this interest differs from the interest of present-day sociologists. The difference between the two is not simply the difference between the levels of analysis—whether macro or micro—but also between an interest in the external political sphere of society and the internal political structure of the organizations.

The study of organizations, then, has developed mainly as a result of the proliferation of large-scale organizations in modern society. It must be asked why these large complex organizations came to be such a dominant feature of society. The simple answer to this question is that Western capitalism demanded the growth of large organizations. Early capitalism depended upon the factory system of production, a system which developed towards the end of the eighteenth century. In parallel to the growth of the factory system was the technological revolution, which heralded the emergence of steam power upon which the factory system came to depend. The combination of steam and factory brought together under the same roof workers engaged in different stages of production. These were distinctive features of this system of production—the grouping together of larger numbers of workers than there had previously ever been; a strict division of labour; and the demand for an occupationally and geographically mobile labour force. With all these features present, the factory system expanded, calling for a greater division of labour between tasks, more specialized tasks, greater co-ordination, specialist financial controls, and so on (Miller and Form, 1964).

This early industrial era passed on to what Miller and Form call the ‘mature industrial era’. This era has variously been known as that characterized by urban society, mass society, or more simply, modern society. The type of organization to be found in the mature industrial era is that known as the bureaucracy. In sociology, as seen later, the word bureaucracy is used in a value-free sense and has none of the pejorative connotations that it possesses in everyday language. It merely describes a particular kind of organizational apparatus. The bureaucracy developed in modern society as a response to the growing specialized division of labour and the sheer size of organizations, not only in the industrial sphere, but also in the educational, ‘social’, political, and economic spheres.

Modern organizations have also become more bureaucratized because of factors such as formalization, decentralization, and rationalization. Formalization means the growth of the administrative work of the organization as the size of the organization increases. Accompanying this is a need for records to be kept, for work schedules to be maintained, and so on. All this calls for a large administrative apparatus for which the bureaucracy is ideally suited. The term decentralization refers to the need in modern organizations for decision-making. More specifically, it refers to the authority given by the organization to individuals to take decisions which will have an effect upon the organization. Because of the increasing size of organizations, the authority to make decisions is delegated throughout the organization. Whereas in the factory system of production most decisions were taken by the head of the organization, the organization in the mature industrial system delegates decision-making throughout the organizational hierarchy. This delegation of the authority for decision-making facilitates the development of a strict hierarchy of control in the organization and also emphasizes the specialized division of labour. Both of these can be taken as features of a bureaucratic organization.

The third feature mentioned as contributing to the increasing bureaucratization of modern organizations in the mature industrial era was rationalization. The term rationalization is used here in the sense that economists use it, that is, as a process whereby mergers take place between industries so that the major company increases in size and the smaller company declines in importance, or one whereby organizations or units of the same company merge. A process such as this has been a feature of the British economic scene since the turn of the century, and still continues. Rationalization of organizations has also occurred in other sectors besides the industrial one. Hospitals, schools, local government have all experienced an increase in the size of their units owing to the ‘takeover’ of the smaller units. Increasing size, as a result of rationalization, provides ideal conditions for the development of a bureaucratic organization.

To put the nature of these organizational changes into perspective a few figures concerning the size of organizations can be quoted. Aaronovitch maintained that the forty largest companies in Britain in 1950 earned around one-third of all the profits made in this country. The aspect of rationalization is demonstrated in the figures he quotes for ‘takeovers’. Out of the hundred largest companies in Britain in 1954, one had been taken over by 1957, and eight more by 1961 (Aaronovitch, 1955). Another way of looking at this is to point out that ‘the total assets of I.B.M. exceed those of Belgium or that General Motors could afford, in strictly financial terms, to buy out Argentina’ (New Society, 18 September 1969). A comprehensive analysis of the size of organizations is presented by Florence (1964) who points out that, despite the rather alarming figures quoted above, the majority of British industrial organizations have remained small, mainly as a result of the nature of the technology and production process.

Early studies of organizations

So far we have discussed some of the more important reasons for the growth in the size of organizations. Also, it has been mentioned that the early sociologists responded to the challenge thrown up by the changes taking place in society. The most significant of these responses can be examined and discussed in more detail.

Karl Marx Marx is usually regarded as a sociologist with respect to his writings on the sociology of knowledge, his theory of social change, and his analysis of class conflict and alienation (Bottomore and Rubel, 1956). His writings on organizations are not usually recognized as being among his more significant analyses. However, lack of recognition should not decry the importance of his writings in this area of study. It has been pointed out that an understanding of the Marxist position on organizations and bureaucracy helps considerably in understanding the controversies that existed in this area at an early stage (Mouzelis, 1967).

Briefly, Marx's analysis of bureaucracy and organizations owes its source to a critique of Hegel's analysis of the state. Essentially, Marx accepts the Hegelian approach whereby the organization is the means by which the civil society (constituting the particular interests) and the state (constituting the general interest) come together. Marx's acceptance of this position is only at a very general level, for in accepting the structure, he radically alters the meaning that Hegel intended. Marx, in line with his propositions about class elsewhere, maintains that the state does not represent the general interest, but, rather, the interest of the ruling class. That is, the state represents a particular interest and this particular interest is itself a part of the civil society. The result of this situation, as Mouzelis points out, is that the bureaucracy becomes one of the tools of the ruling class and in doing so dominates the other social classes. As such, the bureaucracy is a particular social grouping although it is not a social class. Marx goes further than this by stating that the bureaucracy contributes nothing to society in the sense that an industrial organization does, but has a distinctly parasitic nature. In a class society, the bureaucracy is essential for maintaining the class barriers that exist, and as classes become more distinct, the bureaucracy becomes more and more indispensable.

Marx maintained that with the decline of class society, the bureaucracy would disappear—it would wither away in the same way that he claimed that the state would wither away. Where there is no class and there are no class divisions, the bureaucracy no longer has any useful functions, it becomes redundant.

Although this is a very oversimplified analysis of the Marxist position, it is clear that Marx in his writings was deeply concerned with the effect of the large-scale organization upon the wider society with which he was concerned. His analysis, in pointing out the relationship between the bureaucracy and the economic and political spheres of society, provides a clearer understanding of the nature and the functions of the bureaucracy in modern society.

Robert Michels Michels's research on the history of socialist and trade union organizations in Europe at the turn of the century gave rise to his now famous ‘iron law of oligarchy’. Michels maintained that this law was ‘the fundamental sociological law of political parties’ and could be summarized by the statement, ‘who says organization says oligarchy’. The ‘law’ can be applied to various types of organization despite the rather narrow interpretation Michels laid upon it by applying it mainly to political organizations of one kind or another.

Michels was concerned with finding a connection between the development of oligarchies in organizations and the basic characteristics of these organizations. Michels's argument can be summarized in the following way. Whenever a social grouping exists, there is need for a leader to emerge for that grouping. When the social group is a small one, the leadership of the group can afford to be weak and informal. In the case of the small social group, the leader emerges from the group by a spontaneous and natural process. Since the group is a small one, the leader can remain an integral part of the group; he can still participate in the activities which other members of the group are engaged in and can share any decisions which have to be made with other members as well. The authority given to the leader by the group is strictly limited and, to a certain extent, this authority is of a temporary nature.

Many groups do not retain their small identity for ever and often increase in size. When this occurs, the leader of the group has a more positive function because of the greater number of functions the group as a whole has to perform. Michels, therefore, at this stage, establishes a basic relationship, that as the size of a social grouping increases then so does the size of the leader's authority, his personal power, and the amount of delegation permitted in the decision-making process. This is not to say that at this stage the leader is divorced from the rank-and-file membership of the group or the organization.

According to Michels, oligarchy arises in the group because only those members of the group who are given leadership positions are able to carry out the specialized and technical requirements of the job. As the size of the group increases, these requirements become more and more specialized and technical, and consequently, the ordinary member of the group becomes more and more separated from them. On the other hand, the leader of the group advances to a position where he has a greater monopoly of the techniques and requirements and as such he becomes indispensable to the group. Once the leader is in a position of indispensability his power over the other members of the group increases.

One result of this is that the leader is in a position to select senior assistants. Only the leader has the technical expertise and knowledge to select suitable candidates for senior posts in the organization. In this sense, senior posts become part of the personal prerogative of the leader. His position is even more consolidated by this procedure and it becomes even more difficult to oust him from his position since he is surrounded by individuals with a personal loyalty to him. As well as increasing his power, the leader also becomes increasingly independent of the lower-level members of the group.

From a psychological point of view, the ordinary member of the group or organization accepts the position whereby the leader increases his power, authority, independence, and indispensability. He accepts this because he is pleased to have someone else carry out the administrative tasks. He recognizes that he does not possess the expertise of the leadership and willingly allows the position to develop.

The two main factors discussed—the monopoly of expertise of the leadership and the willing submission of the ordinary members—lead to a kind of self-fulfilling prophecy (Merton, 1949). Michels maintains that leaders hold on to power because of a psychological drive towards power and authority. This proposition, however, has doubtful validity. Rather, the leaders are concerned with maintaining their position because of the status they possess apart from the other members of the organization. They become used to the attributes associated with this particular status—for example, their standard and way of living. Again, the leadership may regard its position as being for the benefit of the organization and of the members of the organization.

Given an oligarchic situation, there are several consequences for the organization. The most important of these is that the leadership, in its position of independence from the ordinary membership, may use its power for its own aims. Since a rift exists between the leadership and the rest, the policies for the organization which are decided upon by the leaders may not be in the interests either of the members or of the organization. If personal objectives are held by the leadership then a displacement of objectives can easily arise. The objectives pursued tend to be conservative in nature since this ensures stability in the organization, and the activities of the leader are thus not exposed to the membership.

The differentiation between the leadership and the rank-and-file membership, Michels maintained, is a universal phenomenon. In other words, oligarchy exists in all organizations. However, there are degrees of oligarchy so that there is not invariably a conflict of interests between the two groups.

Michels's findings have been substantiated elsewhere. For example, Berle and Means's (1933) study of a large industrial organization demonstrated that the ordinary shareholder, by only owning a small proportion of the total stock, was separated from the leadership of the corporation. The management of the corporation wielded the power of the organization and, as with Michels's political parties, became indispensable and self-perpetuating.

Michels's study was important not only for the derivation of the iron law. He also provides guides as to the functioning of organizations. Organizational characteristics such as the delegati...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Title Page
• Original Copyright Page
• Table of Contents
• General Editor's Introduction
• 1 The Study of Organizations
• 2 The Modern Study of Organizations
• 3 Social Psychological Theories of Organization
• 4 Methods of Organizational Analysis
• 5 The Organization and its Environment
• 6 Problems in the Study of Organizations
• 7 Summary and Future Trends
• Suggestions for Further Reading
• Bibliography