NATIONAL SECURITY MANAGEMENT:
LEADERSHIP, CHANGE, STRUCTURE, CULTURE, STRATEGY, DECISION,
LEARNING, AND SENSEMAKING
Rei Tang (Project on National Security Reform)
Dr. Christopher Jon Lamb (Project on National Security Reform)
Dr. James Douglas Orton (George Washington University)
The 9/11 attacks on the United States highlighted weaknesses in the current
organizational systems of the U.S. national security community (Weick, 2005; Rothkopf, 2005;
Zegart, 2007), but the health of the system has been questionable for some time (www.pnsr.org).
Outside of Washington there are countless examples of good organization theories and good
organizational practices that can contribute to improving the national security system. This
literature review provides a map of 21 areas of research under the general topics of “leadership,”
“organization theory,” “organization science,” “organization studies,” “strategic management,”
and “strategy.” Figure 1 provides a map to 24 clusters of organization and management theory.
19th Century Tightly 20th Century Moderately 21st Century Loosely
Coupled Organizations Coupled Bureaucracy Coupled Networks
Leadership “Great Man” Leadership Organizational Leadership Strategic/Complexity
Change Organizational Organizational Organizational
Behavior Processes Development/Design Change Processes
Structure Tightly Coupled Firms Moderately Coupled Loosely Coupled
Culture Integrated Culture Differentiated Culture Fragmented Culture
Processes Processes Processes
Strategy Strategy Content Strategy Context Theories Strategy Process
Decision Rational Actors Model Bureaucratic Politics Organizational
Model Processes Model
Learning Individual Learning Team Learning Organizational
Processes Processes Learning Processes
Sensemaking Enactment Processes Sensemaking Episodes High Reliability
“Traditional” views on organization often emphasize individual personality, such as
“great man” leadership models. Later expert opinion on organizations has taken a broader view
of organizational leadership – often referred to as “administration” or “management.” Now
scholars of organization theory are exploring ideas such as strategic/complexity leadership
theories. Other elements of organizational theory have evolved similarly. One way to think
about the evolution of organizational theory is to imagine that in the 19th Century most of our
theories were built on the assumption of a “tightly coupled firm,” in the 20th Century most of our
theories were built on the assumption of a “moderately coupled bureaucracy,” and in the 21st
Century most of our theories are built on the assumption of a “loosely coupled network” (Orton
& Weick, 1990; Weick, 1976). In a typical doctoral seminar in the field of management, the
storyline is always to move the doctoral student from a simplistic, naïve, outdated, but widely
shared theory of the supremacy of “great man” leadership, toward a more complex, subtle,
current theory of strategic/complexity leadership. While this storyline simplifies and sometimes
violates historical accuracy, it is a useful template for illuminating trends in organizational theory
and research. The annotated bibliography below uses the template as a starting point for the
fleshing-out of 21 topic areas of organizational research that are relevant to the Project on
National Security Reform. Subsequent postings in the Project on National Security Reform’s
Research & Analysis Wikispace – pnsr.wikispaces.org – will provide an arena for more detailed
discussions of each of the 21 major content areas.
Every field of human activity is interested in great leadership – sports, politics, health
care, business, and national security. Although some still believe that great leaders are born, not
made, most leadership development programs are built on the assumption that everybody can be
taught to be a better leader. The first generation of leadership research focused on leaders – the
assumption was that if good leaders had certain traits that could be identified, all that was
necessary was to screen people for those traits and put them in charge. The second generation of
leadership research built on the irony that the best way to develop good leaders was to teach
people to be good managers of complex organizational processes – including leadership, change,
structure, culture, strategy, decision, learning, and sensemaking. In other words, a manager is an
organizational leader, and an organizational leader is a higher value to the organization than a
“great man” leader. The third generation of leadership is built on the concept of virtuous circles
– a strategic/complexity leader is skilled at identifying small wins or leverage points that can be
exploited so that a small input of resources yields large positive outcomes. Great
strategic/complexity leaders are more valuable than organizational leaders, and organizational
leaders are more valuable than “great man” leaders.
“Great Man” Leadership Theories
The “great man” fallacy is a widely recognized phenomenon in social sciences in which
large events are explained after the fact by ascribing causality to a single “leader.” This led to
a quest in the early part of the 20th Century for the traits of good leaders – tall, intelligent, good-
looking, driven, intuitive, etc. More recently, leaders are expected to be visionary, charismatic,
and transformational (Bass, 1995). The “great man” leadership myth has been hard to kill
(Meindl, Ehrlich, & Dukerich, 1985).
Frederick, Taylor, (1912), “Scientific Management,” in Shafritz, J. M., & Hyde,
A. C., (Eds.), (1992), Classics of public administration (pp. 17-20). Brooks/Cole series
in public administration. Pacific Grove, Calif, Brooks/Cole Pub. Co.
Scientific management ensures constant rather than irregular initiative from workers, but
it requires four new duties for managers. 1) Managers amass knowledge of workers’ tasks.
This relates to “science” as it involves the classification of knowledge. 2) Study the practices
of workers. 3) Use amassed knowledge and knowledge from the study of workers to train
workers. 4) Place management of the workers’ tasks in the manager’s repertoire. This creates
a much more relationship similar to how coaches manage baseball players.
Follett, Mary Parker (1926), “The Giving of Orders,” in Shafritz, J. M., & Hyde, A.
C., (Eds.), (1992), Classics of public administration (pp. 29-37). Brooks/Cole series in
public administration. Pacific Grove, Calif, Brooks/Cole Pub. Co.
Orders are harder to give than many may believe. Subordinates do not always follow
orders, nor do they always follow orders satisfactorily. Rather than issuing orders,
organizations should first build habit-patterns and attitudes. The steps in the process are: 1)
build up certain attitudes; 2) provide for the release of these attitudes; 3) augment the
released response as it is being carried out. In other words, orders will not take the place of
training; orders will not make a worker do what he/she is incapable of doing. The objective
of training is to produce habit. Proximity can help in increasing the effectiveness of an order.
The ultimate objective of the manager is to resolve internal conflict within the worker – to
create integrated rather than dissociated individuals. Often when a manager issues an order,
the order attacks the worker’s self-respect. It elicits contempt for being commanded. An
order can also be too weak when the manager wants to avoid conflict. The solution is to
depersonalize orders – i.e. orders should come from the situation, rather than from another
person. This creates an agreement that the task should be implemented. Follett says, “find the
law of the situation.” In some ways Follett is in agreement with Taylor in how scientific
management does this.
The worker-manager relationship is a personal relationship or social situation. They
must do a joint study of a problem or situation. This allows the worker to heighten his/her
self-respect, which improves efficiency. It creates pride in one’s work and gives them a sense
of taking responsibility. In order to reconcile the taking of orders and the taking of
responsibility, orders must come from the law of the situation. This is helpful in that
situations change, orders cannot keep up. Orders should also involve circular (agreement)
rather than linear (directive) behavior. Several unresolved issues remain. How can we
eliminate resentment of supervision? How can we point out misconduct? Follett suggests that
supervisors should speak not to blame, but to accomplish something, and to have managers
deliver good news. Follett ends by speculating on the reason why artillerymen suffered the
most mentally after war, mentioning the fact that they had fired from a distance and focused
their fire by telephone.
Micklethwait, J., & Wooldridge, A., (1996). The witch doctors: making sense of the
management gurus. New York: Times Books.
Organizational Leadership (“Administration” or “Management”)
Max Weber is often seen as the starting point for organization theory (Weber, 1946; ,
1947; , 1968). Writing in Germany near the end of the 19th Century, Weber saw a movement
away from traditional firms centered around individual owners toward – at the time – the more
effective idealized “bureaucracy,” in which firms would be viewed holistically as institutions.
Although Weber’s writings would not be translated into English until 1946 and 1947, several
executives and other observers in the United States provided descriptions of how they managed
the large organizations that emerged between 1880-1920 (Fayol, 1923; Gulick, 1937; Gulick &
Urwick, 1923). A generation of researchers noticed that “great man” leadership was not
sufficient to manage the new bureaucracies that emerged during the 20th Century (Chandler,
1962). Philip Selznick argued against reliance on “great man” leadership alone, and argued for
a shift toward a better understanding of administration, which later became known as
“management” (Selznick, 1957). Administration and “management” refer to the technical
competence required to occupy a position of authority in an organization.
Weber, Max, (1922), “Bureaucracy,” in Shafritz, J. M., & Hyde, A. C., (Eds.),
(1992), Classics of public administration (pp. 23-29). Brooks/Cole series in public
administration. Pacific Grove, Calif, Brooks/Cole Pub. Co.
In a bureaucracy, laws or administrative regulations establish jurisdictional areas for
which officials will be responsible. Official duties consist of a distribution of regular
activities conducted by the organization. The permanent establishment of an office is a
characteristic of bureaucracies. Bureaucracies are exceptions rather than the rule in
organizations. They are established in civilizations with a scale requiring it, or in large
businesses. Once established, super and subordinate offices are created for the appeal of
decisions. Management is largely based on the administration of documents and files in
bureaus. Offices are meant to be impersonal, in which the occupant’s official duty is
business, and where the occupant has no personal ownership over the authorities and
resources of the office. Officials follow general rules and respond to decrees rather than
initiating market transactions. Officials often enjoy social esteem. The purest of bureaucrats
are those who are appointed. Elected officials are subordinate to party bosses, rather than the
administrative system and are not experts but managers of spoils. Elected officials can
endanger the expertise of bureaucracies. “Caesarianism” describes an arrangement in which
elected officials appoint subordinates. In an imperial bureaucracy, favor and appointment by
the sovereign is more esteemed than incumbency by election. Officials tend to try to secure
life-tenure in the bureaucracy and promotion in exchange for fixed salaries, financial
security, and a “career.”
Gulick, Luther, (1937), “Notes on the Theory of Organization,” in Shafritz, J. M., &
Hyde, A. C., (Eds.), (1992), Classics of public administration (pp. 38-47).
Brooks/Cole series in public administration. Pacific Grove, California, Brooks/Cole
Large scale enterprises achieve the best results when there is a division of labor.
Organization theory must deal with structure of coordination imposed upon the work-
division units. Organization is how work is divided. Gulick explains why we divide work:
“Because men differ in nature, capacity and skill, and gain greatly in dexterity by
specialization; Because the same man cannot be at two places at the same time; Because the
range of knowledge and skill is so great that a man cannot within his life-span know more
than a single fraction of it. In other words, it is a question of human nature, time, and space.”
Division of labor allows for specialization and eliminates lost time from changing from one
task to another. Certain circumstances make for increased specialization such as the
operation of machinery, law, teaching, accounting.
Division of labor is most of all a pragmatic arrangement, but it has limits. Specialization
that does not require full-time devotion is usually worthless, although there are part-time
exceptions. Technology and custom can interfere with division of labor, such as how a priest
will worship and sweep the church floors, or if the operation of technology requires tasks so
integrated that specialization in the use of the tool requires understanding of multiple
characteristics. Division of labor also cannot pass from physical to organic division, such as
how one cannot milk a cow in the barn and feed it in the pastures at once. Gulick asks, “does
the division work out? Is something vitally destroyed and lost? Does it bleed? (40)”.
In an organization, the whole is equal to the sum of its parts. Organizations should not be
subdivided wherein the central design or purpose of the organization is lost. The construction
of a house, for instance, requires an architect, besides those who do the construction. The
work of an organization must be coordinated. There are two ways to coordinate work in an
organization. 1) Create superiors and subordinates. 2) Allow an idea to dominate, which
creates enthusiasm of the tasks among workers. Size and time can interfere with
coordination. If too large, the parts of an organization can lose sight of the whole. New rules
and the instilling of new habits can take time to establish. If organization is the division of
labor, it must have hierarchy. To build an organization, framers must 1) define tasks, 2)
appoints supervisors, 3) determine divisions, 4) establish structures of authority. The central
concern of organizational theory is the establishment of structures of authority. The most
important functions of an organization are too 1) enable direction, 2) coordinate an energize
subdivisions, 3) achieve major objectives, 4) operate efficiently.
Supervisors are limited by the amount of control they have by time and their energy.
Exact and routine work is easier to control than diversified, qualitative, and scattered work,
which is mostly found at the top of organizations. As such, it is better to reduce the number
of individuals in a group as one moves up the structure. Also important is unity of command,
which is the source of where commands are issued. Multiple commands often create
confusion. It is tempting and sometimes necessary to set up more than one master.
Efficiency is related to homogeneity. Non-homogeneous tasks in a team create friction. In
a team of experts, laymen should not manage them. In a democracy, where politics can
determine so much of how government runs, inefficiency is common. Experts especially
those who are very specialized, desire independence, and may dismiss the needs of the
people. The commoner is usually the better judge of his/her needs than the experts. A. E.
says, “on tap, not on top.”
Some people differ in thinking about organization from top-down, where one examines
subdivisions under chief executive, or bottom-up, where one examines individuals units and
how they build into an aggregate. Both consider the entire organization, which is acceptable,
but they have their weaknesses as well. Top-down thinkers must not sacrifice individual
effectiveness, while bottom-up thinkers must not thwart coordination. Solutions must be
bottom-up and top-down. Also, top-down thinkers must consider span of control, while
bottom-up thinkers must consider homogeneity. In addition, top management should keep
out of technical matters, and should focus on coordination.
The task of management is to carryout the functions of POSDCORB. Sometimes,
POSDCORB may to be subdivided.
Planning tasks, methods and purposes
Staffing who to bring, training, and controlling work conditions
Directing/ making decisions
Coordinating: interrelating various parts of work
Reporting: informing superiors, subordinates through records, research, inspections
Budgeting: fiscal planning, accounting, control
Daft, Richard L., (2004). Organization theory and design. Mason, Ohio,
Chapter 1: Organizations and Organization Theory
Organizations are open systems. Functions of organizations are supposed to perform the
subsystem functions of production, adaptation, maintenance, management, and boundary
spanning. Five parts of the organizational core are the technical core, top management,
middle management, technical support, and administrative support. The focus of analysis is
not individuals, but the organization itself. The dimensions of formalization, specialization,
hierarchy, centralization, professionalism, personnel ratios, size, organizational technology,
environment, goals and strategy, and culture are elements of measurement and analysis.
These dimensions vary from organization to organization. Turbulence and complexity have
replaced stability and predictability in today’s environments for organizations. Challenges
include globalization, ethics and social responsibility, rapid response to environmental
changes, customer expectations, shifting to a technology-based workplace, and supporting
diversity. An organizational trend is changing from mechanistic to organic models. Many
organizations are being redesigned into learning organizations, characterized by horizontal
structure, empowered employees, shared information, collaborative strategy, and adaptive
“Great man” leadership theories reigned from 1912 to 1957, and organizational
leadership theories reigned from 1957 to 1980. An important discovery that made
strategic/complexity leadership theory possible was Barnard’s observation that organizations
had cultures, and that by using small wins to shape an organization’s culture, an executive could
have a disproportionately large positive effect (Barnard, 1938). With the publication of Michael
Porter’s summary of early industrial/organizational economic theory as Competitive Strategy
(Porter, 1980), leadership theory moved into the new realm of strategic/complexity leadership
theory (Brown & Eisenhardt, 1998). In organization theory, strategic refers to leverage – the
propensity of an act that produces virtuous cycles (Dhillon & Orton, 2001).
Strategic/complexity leadership theory suggests the importance of timing, simple rules, and
leverage (Boal & Hooijberg, 2000; Carley, 2002; Eisenhardt & Bhatia, 2002; Sorenson, 2002).
Brown, S. L., & Eisenhardt, K. M. 1998. Competing on the edge: Strategy as
structured chaos. Boston, MA: Harvard Business School Press.
Boal, K. B., & Hooijberg, R. 2000. Strategic leadership research: Moving on.
Leadership Quarterly, 11(4): 515-549.
Carley, K. M. 2002. Intraorganizational complexity and computation. In J. A. C.
Baum (Ed.), The Blackwell Companion to Organizations: 208-232. Oxford: Oxford.
Eisenhardt, K. M., & Bhatia, M. M. 2002. Organizational complexity and
computation. In J. A. C. Baum (Ed.), The Blackwell Companion to Organizations:
442-466. Oxford, UK: Blackwell Publishers, Inc.
Sorenson, O. 2002. Interorganizational complexity and computation. In J. A. C.
Baum (Ed.), The Blackwell Companion to Organizations: 664-685. Oxford:
Leadership studies focus attention on the role of highly ranked people in complex
organizations, but studies of change focus attention on the processes that leaders, often referred
to as “change agents,” use to move an organization from one place to another (Kanter, 1977; ,
1983; , 1989). The field of Organizational Behavior, a traditional course in most American
business schools at both the undergraduate and MBA level, grew out of an early recognition that
human emotions could impede or accelerate organizational change processes (Lewin, 1948).
The field of Organizational Development and Organization Design are two fields that grew out
of Organizational Behavior. The Organizational Development field had its roots in the National
Training Laboratory’s efforts to surface and overcome organizational pathologies through
“Training Groups” or “T-Groups” (Burke, 1982). The Organizational Design field focused
attention on redesigning organizational structures – unidivisional, multidivisional, functional,
matrix, etc. – in a way that responded to environmental demands and strategic imperatives
(Lawrence & Lorsch, 1967a). Organizational Development and Organizational Design have
been folded into current research on Organizational Change, which focuses attention on
understanding how organizations actually change, rather than on prescribing changes that
organizations should make (Huber & Glick, 1993).
At Harvard Business School in the 1940s and 1950s, researchers focused on the
behaviors of individuals within complex organizations (Roethlisberger, 1941a; 1941b; , 1977;
Roethlisberger & Dickson, 1934; , 1939; Roethlisberger & Dickson, 1946; , 1961).
“Organizational Behavior” has its roots primarily in the field of psychology, often using
individuals as the unit of analysis (Maslow, 1943). Organizational Behavior theories, though,
are rarer and perhaps thus more valuable than psychological theories – there are 150,000
members of the American Psychological Association, but only about 3,000 members of the
Organizational Behavior Division of the Academy of Management.
Roethlisberger, F. J., (1969), “The Hawthorne Experiments,” in Shafritz, J. M.,
& Hyde, A. C., (Eds.), (1992), Classics of public administration (pp. 67-77).
Brooks/Cole series in public administration. Pacific Grove, Calif, Brooks/Cole Pub.
The Hawthorne experiments were a series of experiments conducted by researchers at the
Hawthorne plant of the Western Electric Company. The results were made public by Stuart
Chase in Readers’ Digest under the title of “What makes a worker like to work?” The
research demonstrates that human problems require human solutions which need human data
and human tools.
The first experiment was to find a relationship between quantity and quality of
illumination and efficiency of industrial workers. A test group of telephone relay assemblers
would work with varying intensities of light by increasing magnitude from 24, to 46, to 70
foot candles. A control group would work with light of the same intensity. In all cases, the
output remained the same. They also decreased magnitude from 10 to 3 foot candles, in
which output increased for both groups. They told the workers that they would increase
illumination without doing so, in which output remained the same, but the workers believed
illumination increased. They told the workers that they would decrease illumination, in which
output also remained the same, and the workers believed illumination decreased. People
found the research to be very peculiar, in that there were so many uncontrollable variables in
the testing. Some wondered that human motivation would require change of human factors.
This was an example of a human experiment done in non-human terms.
The next set of experiments involved five girls assembling telephone relays. They were
studied for five years. The researchers changed a host of physical inputs, and recorded the
girls’ routines thoroughly. They hypothesized that fatigue was responsible for differences in
output. They changed sleep patterns, rest pauses, working day and week lengths, and
provided lunches. The investigators and operations were the same. They were happy, they
earned more money, produced more, and were objects of attention from the management. But
after going back to the normal routine, output remained the same as it was in the experiment.
When humans are experimented upon such as in this case, they know. The experiment had
altered the social situation in the room. This led to the development among researchers of a
new and more fruitful point of view. The researchers realized the importance of worker
attitudes and sentiments. One’s work habit reflected how he/she felt about his/her job, fellow
workers, and superiors – the meaning for the worker about what has been happening around
The researchers began a new experiment in which they would interview workers. It was
difficult at first – to not interrupt, give advice, make moral judgments, argue, be too clever,
dominate a conversation, or ask leading questions. It was also difficult to get information on
what was important for the worker, and not the interviewer. They found the most significant
thing to a person was not something in his/her immediate work situation. Sooner or later the
workers would disclose the most important things they felt. The researchers protected the
confidences of the workers. They came up with a new way of viewing employee satisfaction
and dissatisfaction. They first assumed that logical relations existed between likes and
dislikes and certain items and events in the immediate work situation, wherein they could
correct the complaint and the problems would be solved. This assumption was simplistic.
Sometimes workers would report gratitude for a change that did not happen. Researchers
found that some complaints dated years back. Workers seemed to just want someone to
whom they could talk. The research defied the assumption of the logical “economic man.”
The new concept had three key lessons: 1) the behavior of workers cannot be understood
apart from feelings and sentiments, such as in phenomenon expressed as “loyalty,”
“solidarity,” and “integrity.” 2) Sentiments are easily disguised. Integrity can be expressed in
a handshake or expressed as violated in a sit down strike. People project their sentiments on
the world, where they may say, “The world is bad,” rather than, “I feel bad.” 3) Sentiment
can only be understood in terms of the total situation of the person. The meaning of a change
depends on: 1) social conditioning or sentiments (values, hopes, fears, and expectations)
brought to work from home and group associations. One must find the relation of change to
these sentiments. Change also depends on: 2) satisfaction developed from social participation
with coworkers, supervisors and immediate work groups. Work is primarily a social
environment. Workers are members of a group. They have sentiments and feelings for each
other which lead to a collaborative effort. They attach meaning to every item and object in
the industrial environment such as material goods, output, wages, hours of work – they must
be interpreted as carriers of social value. Output is a form of social behavior.
In their new experiment the researchers interviewed workers in the bank wiring
observation room. Three occupational groups were put in the room: wiremen, soldermen, and
inspectors, and the more output they produced, the more they earned. People did not put
pressure on each other for output as expected. Those who worked too hard were called
“ratebuster.” Those who worked too little were called “chiseler.” Those who reported
negatively were called “squealer.” Inspectors were pressured to not be too officious, or act
like inspectors. To be respected, they had to abide by social standards. The best performers
were not the most accepted, but the one who performed at the rate everyone agreed was best.
Also, output did not correspond to tests of intelligence or dexterity. The most intelligent
worker actually had the lowest output. Each worker’s level of output reflected his position in
The researchers became interested in the informal employee groups – their beliefs,
creeds, and social norms. These groups were not represented in company charts, and were
results of employees working together without choice in whether or not they would
cooperate. The researchers studied important social functions – their histories, how
spontaneous they are, how they perpetuate themselves, multiply, disappear, or when they are
in jeopardy from technical change and how they resist innovation. They also examined how
codes and norms were at variance with technical and economic objectives of the company as
a whole, in which it was more likely for groups to oppose and separate from the objectives of
the whole organization. The researchers thought they had arrived at the heart of the problem
of effective collaboration. It shows how many perplexing problems became intelligible. They
found salary is not the prime incentive for performance. The researchers found people
wanted the satisfaction of being accepted as people of worth by friends and work associates.
Money is always a small part of a social organization. The way people are greeted by their
superiors, being asked to help a newcomer, keep an eye on a difficult operation demonstrated
social recognition. These facets of their work environment tell how they stand in a group.
People want evidence of social importance, a socially useful skill, and security from being
accepted as a member in a group. Problems are created when people who feel personal
integrity is injured, which is neglected by over-logicized machinery. These were the matters
of primary importance in Hawthorne, and not negotiated in contracts. If industry is filled with
people in a social void and without social functions, these problems exacerbate. If workers
are an integral part of social situations at work, things often work out.
The researchers found that solutions must include understanding of human situations, the
dealing of problems with human methods, which is a precondition for effective collaboration,
and that the performance of workers is based on sentiment rather than logic. The key point is
that the worker is a social animal. Even while technological advancement has been
tremendous, the handling of people is archaic. The Hawthorne experiments call for further
research in understanding human motivation.
Maslow, A. H., (1943), “A Theory of Human Motivation,” in Shafritz, J. M., &
Hyde, A. C., (Eds.), (1992), Classics of public administration (pp. 80-95). Brooks/Cole
series in public administration. Pacific Grove, Calif, Brooks/Cole Pub. Co.
In building a theory of human motivation, the drives that are classified must be human
and more than just biological, and should come from the subconscious. The basic needs of
humans are physiological needs, safety needs, love needs, esteem needs, and self-
actualization. Physiological needs are largely defined by the conditions of homeostasis of the
blood stream – water, salt, sugar, protein, fat, calcium, oxygen, acid-base balance, and
constant temperature. These things determine the appetite of human beings, and produce the
hunger and thirst, driving humans to eat and drink. Physiological needs do not include
sensory pleasure. They are also relatively independent of each other. Sometimes, what may
seem like behavior that fulfills a physiological need may actually fulfill other needs.
Physiological needs are the preponderant factor for motivation when one is in extreme
deprivation. Once physiological needs are satisfied, other needs emerge. Safety needs emerge
once physiological needs are satisfied. Safety comes from undisrupted routine or rhythm.
Disruption of such factors can amount to illness. Early experience in one’s life of quarreling,
assault, separation, or death can cause one to live in fear. Products of safety motivation
include science and philosophy – things that humans can use to organize the world. Love
needs arise when safety needs are satisfied. The thwarting of love leads to maladjustment.
Love is not synonymous with sex. Esteem needs drive achievement, respect from others,
confidence, self-respect, independence, and freedom. Thwarting of esteem needs leads to
feelings of inferiority, weakness, and helplessness. The highest of needs is self-actualization,
in which a human actualizes his/her potential. This need is very individualized, and requires
more research to discover more of its properties.
McGregor, Douglas Murray, (1957), “The Human Side of Enterprise,” in
Shafritz, J. M., & Hyde, A. C., (Eds.), (1992), Classics of public administration (pp.
187-194). Brooks/Cole series in public administration. Pacific Grove, Calif,
Brooks/Cole Pub. Co.
Social sciences can be used to make human organizations more effective. Changes have
already taken place in the study of human organizations that consist of ideas from the social
sciences. However, differences remain. The conventional manager’s view, which McGregor
labels “theory x,” consists of the following propositions: 1) management is responsible for
organizing the elements of productive enterprise – money, materiel, equipment, people, 2)
people must be motivated, directed and controlled, 3) people must be persuaded, rewarded,
and punished to carry out the needs of the organization. Theory X has several additional
beliefs that are less explicit. These include: the average man works as little as possible, lacks
ambition, dislikes responsibility, prefers to follow, is inherently self-centered, indifferent to
organizational needs, resistant to change, gullible and not very bright. Although this is the
conventional view, management styles still very from strong, coercive, and controlling to
soft, harmonious and permissive. Both ranges of styles have weaknesses. If the manager is
too strong, conflict will result; if too weak, people will take advantage of the manager. The
popular style is to be “firm but fair.”
The conventional view is incorrect. The conventional view assumes that human behavior
is a consequence of organization rather than human nature – theory X confuses cause and
effect. Maslow’s theory of human motivation – “theory y” – examines human behavior in an
organization with a different perspective. Theory X assumes that the fulfillments of
physiological needs is the objective of workers, however, theory Y postulates that when a
need is satisfied, it is no longer a motivator of human behavior. As such, needs in the higher
levels of the motivation hierarchy must be examined. With regard to security needs,
employees need security in order to take risks. Dependence and subjection to unilateral
action by a superior thwarts satisfaction of this need. Employee social needs include
acceptance, a sense of belonging, acceptance and friendship. Managers are often weary of the
pursuit of these needs, assuming they threaten the organization. However, close and cohesive
groups of workers have been shown to be more effective. When managers attempt to
dismantle informal groups created by these needs, they tend to create more conflict in the
workplace. Workers also have ego needs, which includes self-esteem, self-respect, respect
from others, confidence, independence, freedom, competence, knowledge, reputation, status,
recognition and appreciation. Organizations offer few opportunities for workers to fulfill
these needs. The last level of needs is self-actualization, in which one realizes one’s own
potential. Modern life gives limited opportunity to fulfill all these needs.
Managers should try to create a work environment that can fulfill the needs of the
organization’s workers. Management by control impedes the creation of this environment.
Theory assumes the following propositions:
1. Management is still responsible for organizing elements of productive enterprise.
2. People are not naturally passive and resistant to organizational needs.
3. Management does not instill motivation, but provides conditions for motivation.
4. Managers should seek to have workers achieve their individual goals that are
congruent with the organization’s through their own effort.
The transition to theory Y, but organizations have recently made some correct steps.
Decentralization and deregulation, job enlargement by giving workers more responsibilities,
participative and consultative management, and worker created performance appraisals are
all methods of applying theory Y to organizations. None of these will work, however, if they
are implemented with cynicism or as gimmicks.
Peter, Lawrence J., (1969), “The Peter Principle,” in Shafritz, J. M., & Hyde, A. C.,
(Eds.), (1992), Classics of public administration (pp. 347-350). Brooks/Cole series in
public administration. Pacific Grove, Calif, Brooks/Cole Pub. Co.
Pfeffer, Jeffrey, (1998). The human equation building profits by putting people first.
Boston, Harvard Business School Press.
Organizational Development/Organizational Design
Growing out of the field of Organizational Behavior in the 1960s was a group of
researchers who sought to improve organizational performance. Two separate approaches were
used – one primarily social psychological and one primarily structural. Organizational
Development focused on a portfolio of interventions that could be used to alleviate
organizational pathologies (Argyris, 1970; Burke, 1982; Kahn, 1974). Organizational Design
was developed by Paul Lawrence and Jay Lorsch at Harvard Business School, and focuses
attention on the evolution of organizational forms (Galbraith, 1972; Lawrence & Lorsch, 1967a;
1967b; Lorsch & Lawrence, 1965).
Argyris, Chris (1957), “Organizational Behavior,” in Shafritz, J. M., & Hyde, A.
C., (Eds.), (1992), Classics of public administration (pp. 182-187). Brooks/Cole series
in public administration. Pacific Grove, Calif, Brooks/Cole Pub. Co.
Organizational behavior has two components: the individual and the formal organization.
The needs of individuals are often incongruent with the needs of formal organizations.
Individuals engage in informal behaviors to: decrease subordination from management,
decrease probability of unilateral action by superiors, release frustrations, and to create
informal worlds for psychological shelter or to influence the formal organization. These
behaviors serve to minimize conflict, failure and frustration. There is always a tension
between individual needs and formal organization optimization. If an imbalance exists
against individual needs, the results could be harmful to the organization. Managers who
dislike informal behavior exacerbate these informal vs. formal tensions. Informal behavior
actually holds back disorganization, and positive informal behavior is largely generated
through good leadership. Organizational behavior has given way to several primary findings:
Proposition I: There is a lack of congruency between the needs of healthy individuals and
the demands of formal organizations.
Proposition II: Disturbances from proposition I include frustration, failure, short-term
perspective, and conflict. Frustration is caused by blocked self-actualization; failure by
the inability to define one’s own goals in relation to the organization’s central goal; short-
term perspective from murkiness and instability in the future; conflict by efforts to avoid
Proposition III: Under certain conditions, negative informal behaviors tend to increase.
These conditions include individual maturation, increase in dependence, subordination
and passivity, increase in job specialization, and exactness from the formal organization
Proposition IV: The nature of formal principles of organizations cause competition,
rivalry, inter-subordinate hostility, and focus toward parts, rather than the whole.
Proposition V: Adaptive behavior maintains individuality and impedes integration with
the formal organization. Adaptive behavior may lead to: leaving the organization,
climbing the hierarchy, manifest defensive reactions, apathy, the creation of informal
groups to sanction defensive reactions, formalization of informal groups, group norms
perpetuating the former group behaviors, decrease in wants and teaching others the
Proposition VI: Adaptive behavior accumulates, and feedback reinforces the behavior
Proposition VII: Management reactions can increase antagonistic behavior. These include
more directive leadership, more controls, and more bad human resources programs.
Proposition VIII: Other managers can worsen antagonisms.
Proposition IX: More empowerment for employees and good leadership can cause a
decline in adaptive behavior.
Proposition X: Difficulties in proposition IX can be solved by reality-oriented leadership
that acknowledges the need for individuality among employees.
Parkinson, C. Northcote, (1957), “Parkinson’s Law or the Rising Pyramid,” in
Shafritz, J. M., & Hyde, A. C., (Eds.), (1992), Classics of public administration (pp.
194-198). Brooks/Cole series in public administration. Pacific Grove, Calif,
Brooks/Cole Pub. Co.
Work expands to fill time available for its completion. The tasks to be done swell in
importance and complexity in a direct ratio with time to be spent. This leads to officials who
will try multiply their subordinates, not rivals, and officials making work for each other
(buck passing). This leads to the expansion of bureaucratic organizations. Parkinson
expresses the number of staff acquired yearly as x-(2km+1/n).
x= number staff acquired yearly
k=number of staff seeking promotion by appointing subordinates
l=difference between the ages of appointment and retirement
m=number of man hours devoted to answering minutes within the department
n=number of effective units being administered
French, Wendell, (1969), “Organization Development: Objectives, Assumptions, and
Strategies,” in Shafritz, J. M., & Hyde, A. C., (Eds.), (1992), Classics of public
administration (pp. 318-332). Brooks/Cole series in public administration. Pacific
Grove, Calif, Brooks/Cole Pub. Co.
Galbraith, Jay R., & Lawler, Edward E., (1993). Organizing for the future the new
logic for managing complex organizations. The Jossey-Bass management series. San
Galbraith, J. R. (1995). Designing organizations: an executive briefing on strategy,
structure, and process. The Jossey-Bass management series. San Francisco: Jossey-
Chapter 1: Introduction – Four Immutable Forces Shaping Today’s Organizations
The four forces shaping today’s organizations are buying power, variety, change and
speed. With buying power, organizations are designing themselves customers and market
segments. With variety, organizations need to design for customization, responding to market
research and decentralization. Environmental changes mean organizations must constantly
relearn and further decentralize. Organizations now must make decisions and respond to
orders quicker. Information technology (IT) also plays a role in helping organizations attain
greater flexibility and efficiency. Organizational design can be a competitive advantage, but
the executive leadership is responsible for it. Every organization requires a unique design.
All organizational designs must be a balance of priorities, and all have trade-offs.
Part One: A Framework for Organizational Design
Chapter 2: Choosing an Effective Design
The star model is one method to designing an organization. It consists of the five
interconnecting points of strategy, structure, processes, rewards and people. Strategy relates
to an organization’s goals, objectives, markets and core competencies. Strategy guides the
design of the organization. Structure relates to specialization, distribution of power and the
shape of an organization or span of control. There are two kinds of processes: vertical, which
relates to allocation of funds and talent, and planning and budgeting; horizontal, which
relates to work flows. Rewards are things that motivate employees and provide them
incentives to be effective. Rewards include salaries, promotion, profit-sharing and stock
options. People relates to recruiting, selection, rotation, training and development.
Chapter 3: Matching Strategy and Structure
The dimensions of structure are specialization, shape (span of control), distribution of
power and departmentalization. Creating specialized areas in the structure depends on the
skill level needed. Emphasis should be placed on specialization for areas that require high
skill tasks, and less emphasis should be placed for areas that require moderate to low skill
tasks. Shape refers to the number of people forming departments at each hierarchical level in
an organization. Factors in designing shape include leadership competence, homogeneity of
work, independence of task and measurability of results from task. Distribution of power
refers to where decisions are made. Vertical decision-making is determined by centralization
or decentralization. Horizontal decision-making is done by shifting decision-making to
departments. Departmentalization is concerned with how specialized work is integrated.
Functional integration is good for modest size organizations. It allows for greater levels
of specialization, a single face with customers or buying leverage and economies of scale.
Organizing by function reduces duplication and allows for a high degree of standardization.
However, it is not as effective when there the organization offers a variety of products.
Functional structures are inflexible, and the divisions often create barriers.
Organizing around product should be done when product lines have a minimum efficient
scale for their own manufacturing. Product structures compress product development cycles,
but duplication is often prolific, economies of scale for the whole organization is lost, and it
can be confusing for customers who need to interact with more than one product division.
The weaknesses of this structure can be compensated by creating functional lateral processes,
central functions or by using the front/back model.
Dividing by market is effective when buyer power is high in an industry. Organizing
gives companies the competitive advantage of market knowledge, and if a company is
organized by geographic market and around sources of supply, especially if the company
does distribution, the structure provides economies of location. Advances in IT are freeing
many companies from organizing by geography. Service companies, companies that contract
out, and companies that are experiencing decline in manufacturing sales are best suited to
organize by market. However, companies that organize by market are often afflicted with
duplication and incompatible programs. Organizing by market also makes it difficult to share
common products or services.
Chapter 4: Linking Processes to Coordination Needs
Lateral or horizontal processes tend to overshadow vertical processes as organizations
mature and need to coordinate needs across organizational units. The introduction of lateral
processes reshapes a microcosm of the organization for the particular problem. All division
creates a need for coordination. The main challenge of functional organizations is to
coordinate cross-functional work flows, which falls under the responsibility of the general
manager or the management team. In examining lateral coordination, one should consider the
Diversity – The more varied the organization’s work, the more it is decentralized
Rapidity of change – quick change overwhelms functional management teams and
Interdependence of units – teams working on different projects for a greater project
need to cooperate closely
A Process Change – continuous improvement of processes
Speed – lateral processes create a need for a general manager at the point of action
Benefits of lateral processes include more decisions, different decisions that respond to
the environment, and better and faster decisions. However, lateral processes require a desire
for flexibility and decentralization. Costs of lateral processes include inferior decisions
compared to those top management may make, cost in time from employee attention, and
conflict between people who see issues differently. Lateral processes include:
Informal and voluntary – these are minimal and unfocused
Formal – these are simple, multidimensional and hierarchical. They may include the
appointment of a process general manager. They also require more time commitment.
There are many ways to foster voluntary lateral processes. These mechanisms generally
benefit the company, and companies should try not to discourage voluntary lateral
cooperation. Mechanisms to foster voluntary lateral processes include:
Interdepartmental events such as training courses and conferences
Co-location, in which units with the most proximity are those that need to
IT networks that facilitate communication, serve as databases or virtual teams, that
are created with input from the people they are meant to benefit
Mirror Image Departments
Consistent Reward and Measurement Systems that generate incentives for voluntary
Chapter 5: Creating and Integrating Group Processes
Organizations can formally integrate lateral processes in two ways: cross-functional
teams and multi-dimensional teams.
There are six elements of formal cross-functional teams that an organization must define.
Bases: The emphasis of the group’s structure
Charter: the scope, mission, and authority of the group
Staffing: representative and chosen from each affected unit – mirror images are ideal
Conflict: problem-solving and conflict resolution training and processes
Rewards: the group members must be given incentives and be encouraged to carry
out their mission
Leader Role: the organization may decide to simply let a leader emerge from the
group, or it may decide to appoint or rotate leaders
Simple group structures are those in which the organization creates a structure for an end-
to-end task that can be independently and easily measured, and where the group is given a
large amount of decision-making power. Complex group structures are large, involve
subprocesses and multiple dimensions. Work flow process teams involve a liaison leadership
team that directs subprocess teams.
Multidimensional teams are essentially teams created from matrix structures. The
priorities for these teams are set by top management. The organization must consider how it
will approach the several integrating roles for multidimensional teams.
Structure of the role – to who the integrator reports, preferably the general manager
Staffing choice – integrators should be found and grown into leaders, and should be
known as team players, and should have interpersonal skills
Status of the role – the organization should create cultural status for the role through
promotion, office space, and by giving abundance of qualified staff
Informational systems – the integrator must have the capacity to receive and analyze
all data relevant to the mission
Planning processes – the integration team and organization must agree on
performance targets and resource availability; and the organization must provide
information systems support
Reward systems – the organization must reward completion of goals and good
Budget authority – the organization should give the integrator complete control over
his or her budget
Dual authority – in a matrix organization with a team manager working for two
functional managers, the two functional managers should agree on objectives and
criteria for the team. The two function managers must be experienced and able to
Part Two: Pathways to New Organizational Forms
Chapter 6: Using Design as an Evolutionary Change Agent
There are three new structural models that bring organizational change. The first is the
functional integrator model, in which a functional organization switches to another structural
form in which functions serve as integrators, such as a mirror image structure. The task of the
integrator in this form is functional excellence. The second model is the distributed
organization, in which relations between units are peer-to-peer and coequal, where units are
interdependent. The extreme decentralization in this organization is substituted with
reciprocity. Teams of units in this organization conduct overall organizational planning. The
third new structure that can bring organizational change is the front/back hybrid structure. In
this structure, the front end concerns itself with market segments and geography, while the
back end produces the products and technology. Each end is multifunctional, and both ends
are encouraged to consider each other. This structure is very responsive to customer needs.
There are four important design issues in the front/back organization. The first issue is
the placement of marketing – whether in should be in the front or back, because it could be in
both. The second issue is roles and responsibilities – who sets price, inventory, and which
end the company considers the profit center. The third issue is problems of contention, in
which both ends see the world differently. An organization can handle through conflict
Four integration mechanisms exist for front/back organizations. Organizations can use
mirror imaged regional teams in which functional units are coordinated laterally. Marketing
councils, linked to the manage committee, allow organizations to know the perspectives of
different units on price setting, product development and other strategic considerations. The
star model must be used to prevent conflict in the marketing council. The career system
should select people from both the front and back, and rotate them throughout the
organization, while training them for leadership. Lastly, information systems should make
the same data available to everyone in the organization. The two largest advantages of the
front/back organization are that it can do business the way the customer wants, and there is
clear identification of product people and the front end.
Chapter 7: Creating a Virtual Corporation
A virtual corporation is a network of independent companies. The ability of this type of
organization to contract, be highly flexible, to have scale without mass has allowed it to
become popular very quickly. However, disadvantages to this organizational form include
loss of proprietary knowledge, profit and added value given to others, and loss of control
over business parts.
Design of a virtual corporation should follow from business strategy. Several issues in
partnering strategy include roles, activities, ownership, what to contract, whether to
specialize or coordinate, the activities of the integrating role in relation to what is important
to the customer.
There are several types of external relationships, each with different coordination
requirements. Market relationships are purchases of commodities from spot markets where
buyers and sellers are generally unknown to each other. Contract relationships involve
negotiated terms, when items are not standard or when there is need to secure supply. There
is occasional need for coordination, but dependence in this relationship is minimal. In
sourcing and alliances, organizations share long-term plans and conduct joint product
development. There is substantial need for customization by the supplier for the customer.
Sometimes there are alliances between competitors. This type of relationship requires
substantial coordination, and the organizations are moderately dependent on each other.
Equity relationships involve equity transfer; mostly in the form of joint ventures that acts as
equity pools or that allows cross-share holdings. The equity is intended to establish a long
term bond of trust. These relationships involve non-disclosure agreements and non-
competitive products for a time period. This relationship involves a great deal of coordination
and the organizations are highly dependent on each other. The last type of relationship is
ownership, in which the organization the unit falls under has ultimate control. This
relationship reduces vulnerabilities, requires a great of coordination and where dependence is
There are four types of structures for joint activities, or partnership structures. The basic
partnership structure in which a organization fulfills a function or conducts product
development. In an operator structure, the lead is taken by one group that is staffed by other
organizations. In a shared model, work is divided by basic skills, responsibility is shared, and
decision-making is decentralized. In an autonomous structure, decisions are made by a
venture. This structure is usually the result of other partnership structures evolving into it.
Partnership structures require supporting activities that touch on the two remaining
elements of the star model. The first is people, in which organizations select and develop
people for partnership structures. Information sharing should be encouraged, yet people
should also be given clear guidelines for discretion. Reward mechanisms but be win/win, and
should encourage people to see through the eyes of their partners.
Chapter 8: Leading and Integrating Networked Organizations
The coordinator’s responsibility in a networked organization is to be a network
integrator. Integration roles can be for the overall partnership or subsets. Partnerships are
commonly created around industry value chains – a sequence of activities that add value for a
product or service system. These are commonly vertically disintegrated. Subsystems are
often outsourced. The network integrator may vary depending on the role. Common
ownership is not necessary for unity of effort. Integrated networked organizations can act as
if they are vertically integrated.
Several conditions allow a firm to take the lead in integration. The first is negotiating
leverage, which is granted by buying and selling leverage, specialization needs and
proprietary technology. The organization with negotiating leverage still needs to maintain
trust, however. The second condition is knowledge and information. The integrator by its
nature compiles all information for work flow improvement and value chain integration.
Financial capabilities act as a condition through ability to finance projects and deals. Lastly,
credibility allows the integrator to be trusted. An integrator should not try to exploit the
partnership, and should work to help its partners. The integrator is responsible for the
performance of the network, especially with regard to brand management. An integrating
structure should consider all of these elements.
Chapter 9: Organizing a Continuous Process Design
This chapter focuses on methods to change or create organizations. The design of an
organization is continuous process, not a single event. It must consider all the elements of the
star model, not just structure. Organizational design should be guided by strategy, which is
also in continuous change.
The design sequence should begin with strategy. In choosing the right structure, the first
changes should fix current problems. Next, the organization should identify priorities for
department specialization. If the priority is function, the organization should expect long
decision-making cycles and high scales. If the priority is process, the organization should
expect fast decision-making cycles. Organizations can also prioritize function and geography,
which involves high scales, or just geography, which works well to lower transport costs and
scales. The organization should determine its scale and expertise needed. Organizations
should also examine decision-making processes and their relation to strategy.
Roles and responsibilities are defined after structure and lateral processes are set. The
design of roles and responsibilities requires significant interaction with those who hold
current positions. Organizations should interview these people. Organizations can then use a
certain labeling mechanism for decision-making to reduce turf conflict.
R = responsible, A = approve, C = consult, I = inform, X = no formal role
Ideally, all roles should be labeled R. In creating performance from organizational
design, the organization must be committed to change and the design must match strategy.
Other elements in the continuous organizational design process is the development of
criteria and alternative structures. Organizations may require workshops, and training
sessions on organizational design in order to create a concern about organizational design.
Organizations may also want to schedule interviews with its members. After some proposals
for alternatives, organizations should test the alternatives outside the organization. The
organization would compile the data and comments and modify the design. Points of
contention would continue to be debated. The organization would then submit its compiled
design to its members for feedback, recommendations and comments. Those who disagree
would offer alternative solutions to the problems. It is important that organizations carry out
change fully, but management must seek to keep trust of its employees and must listen for
Organizations should seek effectiveness rather than attractiveness in design, and should
avoid extreme fads. Organizations should use integrate all aspects of the star model in their
Ostroff, Frank, (1999). The horizontal organization: what the organization of the
future looks like and how it delivers value to customers. New York: Oxford University
Organizational Diagnosis/Development is biased toward the study of planned
organizational change, but many researchers find it helpful to study all types of change, planned
and unplanned. A center of expertise in organizational change processes developed around the
research of University of Michigan professors Robert Kahn and Daniel Katz (Katz & Kahn,
Katz, Daniel and Robert L. Kahn, (1966), “Organizations and the System Concept,”
in Shafritz, J. M., & Hyde, A. C., (Eds.), (1992), Classics of public administration (pp.
238-249). Brooks/Cole series in public administration. Pacific Grove, Calif,
Brooks/Cole Pub. Co.
Organizations make up a group of individuals, and are not so simple as to be guided by
an objective. In using systems analysis, organizations can be seen as input and output
systems. There are two criteria for identifying social systems and determining their functions.
First, trace the pattern of energy exchange or activity of people as it results in some output.
Second, ascertain how the output is translated into energy which reactivates the pattern.
Systems analysis view organizational functions as outputs rather than conscious leaders of
groups. It is concerned with relationships, structure and interdependence, and is dependent on
the external environment. The following are common characteristics of open systems:
1. Importation of energy: Energy from external environments affects and vitalizes systems.
Social organizations must draw energy from other institutions, people and the material
2. The Through-Put: Open systems transform energy available to them, creating new
products, processing materials, training people, and providing services.
3. The Output: Organizations export some product in to the environment.
4. Systems as Cycles of Events: Output reinforces system processes through profit or
satisfaction. Events, rather than things are structured. Functions in organization structure
and subsystems give further reinforcement.
5. Negative Energy: To acquire more energy from its environment than it expends to
6. Information Input, Negative Feedback, and the Coding Process: Information is
considered an input that allows organizations to adapt to their environments. The simplest
type of input is negative feedback, which corrects deviations from a system’s course. The
quality and type of information received is determined by the system’s attenuation.
7. The Steady State and Dynamic Homeostasis: The character of a system remains the same
to transform energy as required. In countering energy, systems move toward growth and
expansion. Damage is automatically fixed, but changed as a result. The basic principle in
systems analysis is that systems seek to preserve themselves. Systems store reserve
energy for safety. Systems try to ingest or establish control over the environments, which
make them grow further. There are two types of growth. The first is one in which
subsystems develop. The second is when growth creates a qualitative difference of the
8. Differentiation: Global patterns are replaced by more specialized functions, because
systems become too complex and specialization increases. This happens because systems
seek to be steady.
9. Equifinality: A system can reach the same final state in a different ways. As open systems
move toward regulatory mechanics to control their operations, equifinality is reduced.
Some consequences of viewing organizations as open systems include the realization that
organizations must change and adapt to their environment. Too much focus on coordination,
control and stability hinders flexibility. External factors should be recognized, rather than
adopting the “public be damned” approach. Equifinality means there is not necessarily one
best way. Organizational theory still follows the closed system concept.
Daft, Richard L., (2004). Organization theory and design. Mason, Ohio,
Chapter 9: Organization Size, Life Cycle, and Decline
Organizations evolve through distinct life cycle phases as they grow and mature.
Managers must guide the organization through entrepreneurial, collectivity, formalization
and elaboration stages of development. Organizations grow to become bureaucracies, which
is a logical form of organization that lets firms use resources efficiently. Many organizations
may reduce bureaucracy by decentralizing authority, flattening organizational structure,
reducing rules and written records, and creating small company mind-sets. These
organizations trade economies of scale for responsive, adaptive organization organizations.
Sometimes an organization may subdivide. Incident command systems allow an organization
to transition from bureaucracy, which is effective in stable environments, to flexibility during
crisis. Larger organizations require more support from clerical and professional staff
specialists. There are three ways to control an organization: market (outputs are priced,
competition exists), bureaucracy (standard rules and rational-legal authority of managers),
clan (self-control, rely on commitment, tradition, and shared values – more organic and
flexible). When organizations stop growing, they decline. Managers must try to detect
decline. Causes include: atrophy, vulnerability, and environmental decline or competition.
Stages of decline include the blinded stage (when leaders miss signals), inaction stage (when
leaders are in denial), faulty action stage (when leaders make a mistake – leaders are often
pressured to downsize and retrench, in which they should clarify values and provide
information), crisis stage (social fabric of the organization is eroding and requires dramatic
changes in leadership, structure, strategy, or culture), and dissolution stage (where
organization suffers an irreparable loss of reputation, markets, loss of personnel, and capital).
In downsizing, organizations should: 1. communicate more, not less, 2. provide assistance to
displaced workers, 3. help the survivors thrive.
Part 5: Managing Dynamic Processes
Chapter 11: Innovation and Change
There are two tempos of organizational change: incremental and radical. There are four
types of change: technology, products and services (encouragement of employee autonomy,
department charged with creating new technical ideas, venture teams and idea incubators,
encourage idea champions – often requires inter-departmental cooperation), strategy and
structure (top-down approach typically best, restructuring, downsizing, policy change, goal
revision, control systems), and culture (generally responsibility of top management – done
through reengineering, shift to horizontal form, greater diversity, shifting to a learning
organization, and organizational development (OD)). Strong leadership is needed in times of
change. Barriers to change include excessive focus on cost, failure to perceive benefits, lack
of coordination, and individual uncertainty avoidance and fear of loss. Managers must plan
changes. Techniques to help change include establishing a sense of urgency, creating a
powerful coalition to guide change, formulating a vision and strategy, aligning with the needs
and goals of users, or even forcing innovation. Change teams and idea champions are also
Several landmark books have provided reviews of organization theory. March and
Simon started to build the field with an early set of observations about complex organizational
processes such as decision-making and organizational learning (March & Simon, 1958). March
later edited the influential Handbook of Organizations (March, 1965). W. Richard Scott
captured many of the subtleties of organizational sociology in his book, Organizations:
Rational, Natural, and Open Systems (Scott, 2003). Mary Jo Hatch suggested that organization
theory could be sorted similarly to Scott, into modernist, symbolic-interpretive, and
postmodernist perspectives (Hatch, 1997). Gareth Morgan expanded the analysis of
organization theory by suggesting that organizational research could be sorted into eight images
or metaphors of organization: machine, organism, brain, culture, political arena, instrument of
domination, psychic prison, and flux and transformation (Morgan, 1980; , 1986). The most
highly regarded current work in organization theory is Joel A.C. Baum’s The Blackwell
Companion to Organizations, which explores ten different theoretical approaches to
organizational strategies and organizational structures: economic, technological, power,
institutions, learning, cognition, ecology, evolution, networks, and complexity (Baum, 2002).
For each of the ten theories, Baum commissioned organization and strategy theorists to review
literature at three different levels of analysis – intraorganizational (organizational processes
that involve networks of people within the organization), organizational, and interorganizational
(organizational processes that involve networks of organizations).
A group of researchers in the United Kingdom at the Tavistock Institute noticed that how
organizations were structured made a difference on how well they performed. (Trist, 1980).
Important studies by Joan Woodward demonstrated that different technologies led to different
organizational structures (Woodward, 1958; , 1965). One early version of this concept was
“sociotechnical systems theory”. Researchers studying a nylon-manufacturing plant and the
Scottish electronics industry after World War II made an important set of observations on the
differences between “mechanistic” and “organic” organizational structures (Burns & Stalker,
1961). In the U.S., organizational sociologists studying under the leadership of Talcott Parsons
discovered the disjuncture between formal structures and informal structures (Gouldner, 1957).
Merton, Robert, (1957), “Bureaucratic Structure and Personality,” in Shafritz, J.
M., & Hyde, A. C., (Eds.), (1992), Classics of public administration (pp. 53-62).
Brooks/Cole series in public administration. Pacific Grove, Calif, Brooks/Cole Pub.
Bureaucracy is a rationally organized social structure that involves clearly defined
patterns of activity in which every action relates to purposes of the organizations. Within
bureaucracies one finds offices in which one’s authorities derive hierarchies, rules and areas
of responsibility. Action occurs within the framework of the rules. Formality is symbolized
by social rituals consistent with the rules, which minimizes organizational friction. There is a
social distance between the occupants of offices, and stability results from mutual
expectations, calculable actions, and protection from arbitrary action. Procedure fosters
objectivity and restrains impulse.
Weber’s description of bureaucracy includes discussion on clear division of integrated
duties; controls, sanctions, and regulations; assignment of roles; meritocracy; and impersonal
processes. Experts act within a set of rules. Cases and problems are categorized. The purest
bureaucrats are those who are appointed, while elected officials function to affect the purpose
of the organizations, without interfering in technical procedure. Emphasis is placed on
attaining life-tenure and vocational security. Individuals are separated from their means of
production. Bureaucracies tend to avoid public discussion of their techniques in order to keep
a competitive advantage against their competitors or foreign governments.
People often emphasize the imperfect and dysfunctional aspects of bureaucracy.
Specialization can lead to inflexibility, which Dewey calls “occupational psychosis”, in
which focus on one thing can lead to neglect of another thing. Limitations come from
attaining precision, reliability, and efficiency, in which pressure to be methodical, prudent,
and discipline leads to instilling sentiment for devotion to rules. Too much adherence to rules
detracts from accomplishing goals, which results in focus on processes over mission.
There are four structural sources of over-conformity in a bureaucracy. 1) An effective
bureaucrat demands reliability of response and strict devotion to regulations. 2) Such
devotion to the rules leads to their transformation into absolutes; they are no longer
conceived as relative to a set of purposes. 3) This interferes with ready adaptation under
special conditions not clearly envisaged by those who drew up general rules. 4) The very
elements which conduce toward efficiency in general produce inefficiency in specific
instances. The idea of the career bureaucrat creates incentives for discipline action and
conformity to regulation. The lack of competition, common destiny, esprit de corps in an
organization leads to a sharing of interests that makes the organization defend its interests
rather than serve clientele and elected higher officials. In such cases, organizations will
withhold information or overload higher officials with information. A tendency exists for
bureaucratic norms that are introduced for technical reasons to become rigid and sanctified.
Also, bureaucrats are subject to the tension of primary (personal) vs. secondary (impersonal)
relations in which they are pressured to treat others impersonally when others desire them to
treat them personally.
Several problems that can serve as subjects for research include how personality types are
accepted into organizations and how personality types respond to bureaucracy. Also, does
promotion lessen competitive anxiety and increase efficiency?
Daft, Richard L., (2004). Organization theory and design. Mason, Ohio,
Chapter 3: Fundamentals of Organization Structure
Structure must provide a framework of responsibilities, reporting relationships,
groupings, mechanisms for linking and coordinating organizational elements into a coherent
whole. Structure determines information-processing. Vertical organizations are designed for
efficiency. Horizontal organizations provide horizontal linkages including cross-functional
information systems, direct contact between managers across department lines, temporary
task forces, full-time integrators, and teams.
Symptoms of structural deficiency include: delayed or poor quality decision-making,
weak innovation and response to environmental changes, and too much conflict.
Options for structure: Functional, Divisional, Multifocused, Horizontal, Modular
Part 4: Internal Design Elements
Chapter 7: Manufacturing and Service Technologies
Technology, organizational structure, and management systems interrelate to increase
performance of organizations. Service technologies, characterized by intangible outcomes
and direct client involvement in the production process, differ systemically from
manufacturing technologies. Understanding the variety and analyzability of a technology
tells one about the management style, structure, and process that should characterize that
department. Routine technologies are characterized by mechanistic structure and non-routine
technologies by organic structure. Technology facilitates interdependence between
departments. Departments depend on each other for materials, information, and other
resources that require coordination. Flexible manufacturing systems are allowing
manufacturing organizations to become more adaptive and organically structured. These
technologies replace routine jobs, giving employees more autonomy, more challenging jobs,
and encouraging teamwork. Socio-technical systems theory attempts to design human and
technical aspects of an organization to fit one another.
Perrow’s framework of four major categories of technology: Routine (clerical, sales, drafting,
auditing), craft (performing arts, trades, fine good manufacturing), engineering ( legal,
engineering, accounting), and non-routine (strategic planning, social science, applied
Relationship of Department Technology to Structural and Management Characteristics
Routine (Mechanistic Structure): 1. High formalization, 2. High centralization, 3. Little
training or experience, 4. Wide span, 5. Vertical, written communications. High
analyzability, low variety.
Craft (Mostly Organic Structure): 1. Moderate formalization, 2. Moderate centralization, 3.
Work experience, 4. Moderate to wide span, 5. Horizontal, verbal communications. Low
analyzability, low variety.
Engineering (Mostly Mechanistic Structure): 1. Moderate formalization, 2. Moderate
Centralization, 3. Formal training, 4. Moderate span, 5. Written and verbal communications.
High analyzability, High variety.
Non-routine (Organic Structure): 1. Low formalization, 2. Low centralization. 3. Training
plus experience, 4. Moderate to narrow span, 5. Horizontal communications, meetings. Low
analyzability, high variety.
Thompson’s types of interdependence that influence organizational structure
Form of Demands on Type of Coordination Priority for
Interdependence Horizontal Required Locating Units
Communication, Close Together
Pooled (Bank) Low Standardization, rules, Low
Baseball Communication procedures
Sequential Medium Plans, schedules, Medium
(Assembly Line) Communication feedback
Reciprocal High Mutual adjustment, High
(Hospital) Communication cross-departmental
Basketball meetings, teamwork
Research at the organizational level must manage the constant interaction between
“parts” and “wholes” in two directions – down and up. Individuals are parts of an
organizational whole, and organizations are parts of a network whole. This constant
embeddedness between levels of analysis can be captured by noting that every study takes place
at the “meso-“ level of analysis – there is always a micro-level beneath and a macro-level
above. One important example of this phenomenon is Philip Selznick’s study of the Tennessee
Valley Authority – the TVA navigates between individual personalities and self-interests and
network-level phenomena related to resources, culture, and politics.
Lilienthal, David E., (1944), “Planning and Planners,” in Shafritz, J. M., & Hyde,
A. C., (Eds.), (1992), Classics of public administration (pp. 95-101). Brooks/Cole
series in public administration. Pacific Grove, Calif, Brooks/Cole Pub. Co.
The Tennessee Valley Authority (“TVA”) is unique because its planning is very open and
flexible. In U.S. history, much of the planners have been elected officials and businessmen.
The settlement of the West and the industrial planning of the Northeast have shown the old
ways of planning to be quite successful, but now the old ways of planning has led to
deterioration of the economy. TVA has been largely successful by assisting farms with
resource management expertise and technology through a kind of “democratic planning.” In
TVA, planners must understand and believe in people, and know that planning is not an end
in itself. The old ways planning, even if done earnestly, can make the mistake of becoming
too unrealistic. TVA planning emphasizes direction over goals, and multiple means, rather
than one. TVA planning is grounded in the present situation, where people and institutions
can take part. TVA has never attempted to eliminate institutions or force reform and has been
given the necessary power to carry out its functions. TVA’s purpose was not to make a plan,
but to help the valley develop. As a result, the successes of TVA have come chiefly from the
people’s participation. As TVA was not a planning agency, but an agency of action, its
experts interacted up close with the people, and its work had to have the support and
voluntary compliance by the people. TVA has shown that plans must be worked out
democratically. TVA has some powers to take property of land owners and sell, but the force
of law was used only to meet the crisis of soil depletion. TVA has insisted on voluntary
compliance, and tries to rely on incentives, contracts, persuasion, encouragement, and other
methods based on gaining the confidence of the people.
Selznick, Phillip, (1943), “The Cooptative Mechanism,” in Shafritz, J. M., &
Hyde, A. C., (Eds.), (1992), Classics of public administration (pp. 135-142).
Brooks/Cole series in public administration. Pacific Grove, Calif, Brooks/Cole Pub.
Cooptation is the process of absorbing new elements into the leadership or policy
determining structure of organization as a means of averting threats to its stability or
existence. Cooptation can be formal or informal. Two conditions result in formal cooptation:
when the legitimacy of an organization is called into question, or when the organization
requires self-governance, i.e. when there is no power transfer, or when decision-making stays
in the hands of the same people. Informal cooptation happens in response to specific power
centers of a community. Cooptation reflects tension between formal authority and social
power. The changes that take place are consequential for the character of the organization.
They also restrict choices for decision-makers. The Tennessee Valley Authority (TVA), for
instance, absorbed local elements into its decision-making, yet TVA had preserved its unity
Kaufman, Herbert, (1969), “Administrative Decentralization and Political Power,”
in Shafritz, J. M., & Hyde, A. C., (Eds.), (1992), Classics of public administration (pp.
351-364). Brooks/Cole series in public administration. Pacific Grove, Calif,
Brooks/Cole Pub. Co.
Scott, W. Richard, (1981). Organizations rational, natural, and open systems.
Englewood Cliffs, N.J., Prentice-Hall.
Organizations do not typically act in a vacuum, and are increasingly likely to be parts of
complex interorganizational networks. Loosely coupled networks, composed of elements that
retain their autonomy but have the capability of working as a coordinated whole, have some
advantages over tightly coupled organizations – they can be more robust, they can be more
innovative, and they can respond more effectively to local concerns (Orton & Weick, 1990).
Henri Fayol and Chester Barnard were thoughtful business executives writing before
World War II who noticed the importance of shared values in the creation of effective
organizational performance (Barnard, 1938; Fayol, 1916). After World War II, several
organizational sociologists wondered how the German bureaucratic organizational form
described by Max Weber in the late 19th Century had nearly conquered all of Western Europe in
the middle of the 20th Century (Parsons, 1956). Parsons’ students Robert Merton, Alvin
Gouldner, Herbert Kaufman, and Philip Selznick noticed that U.S. organizations were
characterized by formal structures and informal structures – often referred to as “how things are
done around here” (Gouldner, 1957; Kaufman, 1967; Merton, 1957; Merton, 1967; Selznick,
1948). In the 1970’s, triggered by the emergence of successful Japanese multinationals,
researchers adopted anthropological approaches to study organizational culture: Theory A was
an American approach, Theory Z was a Japanese approach (Pascale & Athos, 1981), and
Theory Z was the Hewlett-Packard approach (Ouchi, 1981). Two schools of thought developed
about organizational culture. The MIT-Digital Equipment Corporation school of thought
portrayed cultures as the long shadows of the larger-than-life founder of the organization
(Schein, 1985). The Stanford-HP school of thought portrayed cultures as negotiated orders built
through thousands of small interactions and decisions (Martin, Feldman, Hatch, & Sitkin, 1983).
Joanne Martin built a model that integrated that Stanford and MIT approaches with many other
studies of organizational culture: an integration perspective on organizational cultures, a
differentation perspective on organizational cultures, and a fragmentation perspective on
organizational cultures (Martin, 1992).
Most popular writings on culture, which are likely to have seeped into the national
security management community, assume that organizations have a single, coherent, integrated
culture (Deal & Kennedy, 1982). A single integrated culture can serve an important role in
efficient control of behaviors – a phenomenon that Bill Ouchi explored in an important article
describing the differences between markets, bureaucraces, and clans as control mechanisms
(Ouchi, 1980). Underlying the culture literature is an evolution in control mechanisms from
first-order control (behavioral control – the manager tells the subordinate what to do), to
second-order control (output control – the manager sets objectives that the subordinate must
meet, through whatever behaviors the subordinate deems appropriate), to third-order control
(control over decision premises). In third-order control, a manager controls how somebody
thinks. There are two ways to achieve third-order control: (1) through selection processes in
which people who do not think a certain way are filtered out, and people who think a certain way
are filtered in; and (2) through socialization processes in which organization members are
taught to think a certain way – about appropriate leadership styles, change processes,
organizational structures, organizational cultures, organizational strategies, organizational
learning processes, and organizational sensemaking processes (Van Maanen, 1973; , 1978; Van
Maanen & Schein, 1979).
Barnard, Chester, (1938), “Informal Organizations and Their Relations to
Formal Organizations,” in Shafritz, J. M., & Hyde, A. C., (Eds.), (1992), Classics of
public administration (pp. 48-52). Brooks/Cole series in public administration.
Pacific Grove, Calif, Brooks/Cole Pub. Co.
Informal organizations are aggregates of personal contacts, interactions and associated
groups in a society. Informal organizations are without structures, without subdivision, and
are the unconscious processes of society. Informal organizations have two classes of effects:
1) they establish certain attitudes, understandings, customs and habits, and 2) they create
conditions for formal organizations to rise. The first class of effects creates divergences and
connective actions between formal and informal organizations. The second class of effects
demonstrates that informal organizations are a precondition for formal organizations, out of
which formal organizations arise. Informal relationships may be brief. A consensus of needs
in an informal organization compels the creation of formal organizations, or if there is
divergence, conflict and disorganization. Formal organizations come into being because
people want to do things with people, and want to fulfill certain needs – people have a
tendency to cooperate, therefore formal organizations are vitalized and conditioned by
informal organizations. On the other hand, disintegrated organizations are polemic.
When formal organizations come into operation, they create require informal
organizations. Many people in formal organizations are unaware of the informal
organizations within. One cannot determine how an organization works by looking at its
formal rules, as one cannot learn how the United States work by looking solely at the
constitution. Informal organizations within formal organizations are rarely studied, except in
the production level of industrial organizations. The functions of informal organizations in
formal organizations include mechanisms for communication, the maintenance of cohesion
by regulating willingness to serve and providing stability of authority, and the maintenance
of feelings of personal integrity, self-respect and the preservation of independent choice.
Informal organizations are not dominated by impersonal or objective authority. However,
informal organizations can be destructive to formal organizations, as they are created to
maintain personality and individualism. Informal relationships with joint purpose and
repetitive character become systemic and organized through effects on habits and thoughts.
Also, endless-chain relationships develop similarities between people leading to mores,
customs and institutions. Formal organizations then make these informal characteristics
Chapter 10: Organizational Culture and Values
Relationship of Environment and Strategy to Culture
Adaptability Culture: need flexibility, external strategic focus
Mission Culture: need stability, external strategic focus
Clan Culture: need flexibility, internal strategic focus
Bureaucratic Culture: need stability, internal strategic focus
Culture and ethical values help determine social capital. Culture is a set of key values,
beliefs, and norms shared by members of an organization. Cultures serve two important
functions: integrate members to know how they relate to one another, and to help the
organization adapt to a changing external environment. Cultures express themselves through
rites and ceremonies, stories and heroes, symbols, and language. Culture should reinforce
strategy and structure. When widespread consensus exists on specific values, the
organizational culture is strong and cohesive. Subcultures can emerge, especially in large
organizations. Learning organizations encourage openness, boundarlyless, equality,
continuous change, and risk taking. Adaptive cultures have different values and behavior
patterns than non-adaptive cultures. Strong, but unhealthy cultures can be detrimental.
Managerial ethics are important in shaping an organization’s culture. Formal systems that
influence culture include ethics committees, ethics departments, disclosure mechanisms for
whistle-blowing, and a code of ethics. Global companies tend to emphasize multicultural
values, merit, excitement for new cultural environments, openness to ideas from other
cultures, and sensitivity to cultural differences. Social audits help organizations maintain
high ethical standards.
Collins, James C., & Porras, Jerry I., (1994). Built to last successful habits of
visionary companies. New York, HarperBusiness.
Chapter 1: The Best of the Best
The book attempts to find the characteristics of what it calls “visionary”
companies. The book’s list of visionary companies is based on a survey of CEOs asking
them what companies they admire the most. The book focuses on how institutions, rather
than leaders, cause a company to perform well over a long period of time. The authors
discovered that visionary companies tended to be extremely resilient and have
extraordinary long-term performance.
The book lists several myths that the authors found to exist in many peoples’
conception of visionary companies. The first is that visionary companies require a great
idea to get started. Visionary companies usually begin slowly and eventually build into
long-term success. The second myth is that visionary companies require great and
charismatic leaders. The authors found that many visionary companies were created by
people who were more interested in institution-building than their own genius. The third
myth is that visionary companies exist first and foremost to maximize their own profits.
Visionary companies tend to pursue a cluster of objectives, of which money is only one.
Visionary companies are also guided by a core ideology that supersedes making money.
The fourth myth is that visionary companies share a subset of “correct” core values. The
authors found that some visionary companies did not necessarily have humanistic or
enlightened values. The fifth myth is that visionary companies consider change constant.
Visionary companies almost religiously adhere to their core ideologies. The sixth myth is
that blue-chip companies play it safe. Some blue-chip companies use what the authors
call “big hairy audacious goals” (BHAGs). The seventh myth is that visionary companies
are a great place to work for everyone. Only those who adhere to the company’s ideology
and who fit within the company’s standards flourish. The eighth myth is that visionary
companies make moves with brilliant and complex strategic planning. The best moves
made by visionary companies usually come from experimentation, trial-and-error,
opportunism, and accident. The authors describe this as “try a lot of stuff and see what
works.” The ninth myth is that companies should hire outside CEOs to stimulate change.
In the book’s research, the authors found that out of a combined lifespan of 1,700 years,
visionary companies have hired outside CEOs only four times. The eleventh myth is as
companies must think about trade-offs – with “OR”. Visionary companies think by using
“AND.” The last myth is that visionary companies derive a lot of their success through
well crafted mission statements. The authors say that the mission statement is only the
After the survey with the CEOs, the authors formed a comparison group of highly
regarded companies with similar products as the visionary companies they listed. They
used the comparison group to identify variables in visionary companies not found in the
group. The authors examined how the companies began, how they grew, the generational
transitions, how they handled wars and depressions and the introduction of new
technology. The researchers attempted to report observations free from conventional
business explanations, and that would be applicable in the real world.
Peters, Tom. J., & Waterman, Robert H. (1982). In search of excellence lessons from
America's best-run companies. New York, Harper & Row.
Schein, E. H. 1985. Organizational culture and leadership. San Francisco: Jossey-
As national security managers know well, organizations are more likely to be
characterized by subcultures than by homogeneous integrated subcultures: State, Intelligence,
and Defense all have different subcultures; Army, Navy, Marines, and Air Force have different
subcultures within the Department of Defense; and Naval Intelligence, Navy aircraft carriers, and
Navy submarines all have subcultures within the Navy. Most studies of subcultures focus
attention on horizontally decoupled subcultures – in which a marketing department has a
different subculture than a finance department – but a smaller number of studies have identified
vertically decoupled subcultures, such as between the managers at Disneyland and the “cast
members” at Disneyland (Van Maanen, 1991). Debra Meyerson and Joanne Martin point out
that integrated cultures co-exist with differentiated subcultures within organizations, so that it is
possible to talk about an overarching Hewlett-Packard culture that is in constant interaction with
a variety of Hewlett-Packard subcultures (Meyerson & Martin, 1987).
Meyerson, D., & Martin, J. 1987. Cultural change: An integration of three different
views. Journal of Management Studies, 24: 623-647.
Van Maanen, J. 1991. The smile factory. In P. J. Frost, L. F. Moore, M. R. Louis, C.
C. Lundberg, & J. Martin (Eds.), Reframing organizational culture. London: Sage.
Culture researchers also learned that people cannot be contained within one subculture,
and that subcultures are not confined within one organization. For example, a Hewlett-Packard
employee might be an African-American Stanford female engineering graduate who works on
laser printers in Silicon Valley. She would be simultaneously a member of multiple subcultures
that slice through the organization, and she can vary her level of commitment to each of the
subcultures, and add new subcultures into her portfolio of subcultures (Hatch, 1997). A recent
dissertation from a Coast Guard officer explored this concept of an individual as the manager of
a portfolio of subcultural identities (White, 2007). If the integrated culture perspective is
valuable as a control mechanism, the fragmented culture perspective is valuable because it
explains how people create innovative identities and solutions within cultures (Meyerson, 2001).
In order to manage culture processes, national security managers must understand the interaction
of integrated, differentiated, and fragmented perspectives on organizational culture.
Martin, J. 1992. Cultures in organizations: Three perspectives. New York: Oxford
Hatch, M. J. 1997. Organization theory: Modern, symbolic, and postmodern
perspectives: Oxford University Press.
In the evolution of organization and management theory, there have been four visible
generations: leadership, organization, strategy, and information. Strategy cannot be separated
from leadership, organization, and information – but there are high rewards in portraying
oneself as a strategist, which leads to an abundance of bad strategy and a shortage of good
leadership, organization, and information processes. Most MBA programs now have a required
course in strategy content, many MBA programs introduce strategy context in a second-year
required course, and some MBA programs offer a second-year elective in strategy process.
Every community has a variety of generic macrostrategies available to them. There are
currently ten generic business macrostrategies: cost leadership, product differentiation, high
reliability, mergers/acquisitions, vertical integration, diversification, globalization, strategic
alliances, strategic networks, and strategic flexibility (Barney, 1997). National security
macrostrategies are different, of course, and might include “containment,” “détente,” and
“democratization,” or might be linked to schools of thought in national security strategy such as
“realism,” “idealism,” and “constructivism.” The study of strategy content is often studied,
taught, and advanced through a retrospective case study methodology – effective organizations
are studied and a retrospective strategy is imposed on historical data (Mintzberg, Pascale,
Goold, & Rumelt, 1996; Pascale & Christiansen, 1983a; 1983b). Strategy Content research is
often built on theories of organizational economics (Silverman, 2002; Witteloostuijn, 2002;
Zajac & Westphal, 2002). It is important to communicate efficiently to new participants in a
community what the generic macrostrategies are, but that does not tell the participants when to
employ a generic macrostrategy (which requires an understanding of strategy context) or how to
create a new generic macrostrategy (which requires an understanding of strategy process).
Daft, Richard L., (2004). Organization theory and design. Mason, Ohio,
Part 2: Organizational Purpose and Structural Design
Chapter 2: Strategy, Organizational Design, and Effectiveness
Organizational goals and strategies are generally designed by top management. Goals
specify mission and purpose, and organization’s desired future state; strategies define the
means. Operative goals relate to subsystems, which include profitability, resources, market,
employee development, innovation and change, and productivity.
Porter’s Competitive Strategies:
Differentiation: producing a unique product
Low-cost leadership: emphasis on efficiency
Focus: concentration on a specific regional market or buyer group using
differentiation or low-cost leadership within the market
Miles and Snow’s Strategy Typology:
Prospector: emphasis on creativity and innovation
Defender: emphasis on efficiency and stability on reliable products
Analyzer: emphasis on stability while innovating on the periphery
Reactor: not really a strategy – ad hoc responses to changes in the environment;
doesn’t work too well
Strategies affect organizational design
Contingency effectiveness approaches:
Goal Approach: assess how well the organization has met goals. This approach is the
easiest to measure.
Resource-based Approach: examine how inputs are transformed. Indicator include
bargaining position (securing resources), ability to perceive the external environment,
ability to use tangible (supplies, people) and intangible (knowledge, corporate
culture) resources in day-to-day activities to achieve superior performance, and the
adaptability. This approach is harder to measure.
Internal Processes Approach: examines organizational health and efficiency, with
emphasis on culture and social environment, and efficient use of resources. It is hard
to evaluate output and the organization’s relationship with the external environment.
These approaches result in competing values. The integrated effectiveness model combines
these values into a single framework. The indicators are:
Focus: external vs. internal
Structure: stability vs. flexibility
Open Systems: external and flexible
Primary goals: resource acquisition and growth
Subgoals: flexibility, readiness, positive external evaluation
Dominant value: establishing good relationship with environment
Similar to resource-based approach
Internal Goal Emphasis: external and stability
Primary goals: productivity, efficiency, and profit
Subgoals: internal planning and goal setting
Similar to goal approach
Human Relations Emphasis: internal and flexible
Primary goal: development of human resources – autonomy and development for
Subgoals: cohesion, morale, training opportunities
More concerned with employees than environment
Zajac, E. J., & Westphal, J. D. 2002. Intraorganizational economics. In J. A. C.
Baum (Ed.), The Blackwell Companion to Organizations: 233-255. Oxford:
Silverman, B. S. 2002. Organizational economics. In J. A. C. Baum (Ed.), The
Blackwell Companion to Organizations: 467-493. Oxford: Blackwell.
Witteloostuijn, A. V. 2002. Interorganizational economics. In J. A. C. Baum (Ed.),
The Blackwell Companion to Organizations: 686-711. Oxford: Blackwell.
There is much more to the practice of strategy than memorizing a list of generic
macrostrategies. Underneath the level of generic macrostrategies is a rich set of more useful
mesostrategies – for example, strategy researchers have identified 13 types of product
differentiation strategies (Barney, 1997), such as differentiation by location.
Daft, Richard L., (2004). Organization theory and design. Mason, Ohio,
Chapter 4: The External Environment
Organizations are open systems, which mean they interact with and are influenced by an
external environment. Organizational environments differ in degree of certainty and resource
dependence. Uncertainty is the result of stable-unstable and simple-complex dimensions of
the environment. Resource dependence is the result of scarcity of the material and financial
resources needed by the organization. Organizational structure is designed to correspond to
the type of environment in which the organization operates. The organization can be
conceptualized as a technical core and departments that buffer environmental uncertainty.
Boundary-spanning (tasks that go beyond fixed jurisdiction) roles provide information about
the environment. Organizations try to control the environment to reduce uncertainty. This can
be done by allocating resources to departments that plan and deal with environmental
uncertainty, and by establishing linkages through acquisition of ownership, strategic
alliances, interlocking directorates (cooptation), executive recruitment, or advertising and
public relations, political activity, trade associations, or illegitimate activities.
Contingency Framework for Environmental Uncertainty and Organizational Responses
Dimensions: Environmental Change (stable, unstable); Environmental Complexity (simple,
Low Uncertainty: 1. Mechanistic Structure, formal, centralized. 2. Few departments. 3. No
integrating roles. 4. Current operations orientation, low-speed response.
Low-Moderate Uncertainty: 1. Mechanistic structure, formal centralized. 2. Many
departments, some boundary spanning. 3. Few integrating tools. 4. Some planning, moderate-
High-Moderate Uncertainty: Organic structure, teamwork, participative, decentralized. 2.
Few Departments, much boundary spanning. 3. Few integrating roles. 4. Planning
orientation, fast response.
High Uncertainty: 1. Organizational structure, teamwork, participative, decentralized. 2.
Many departments differentiated. 3. Many integrating roles. 4. Extensive planning,
forecasting; high-speed response.
Chapter 5: Inter-organizational Relationships
Organizations now see themselves in organizational ecosystems. They try to establish
relationships with many companies in many different industries. Companies now compete
and collaborate at the same time. Four perspectives explain relations among organizations:
resource dependence, collaborative network, population ecology (specialists and generalists),
institution (creating legitimacy for stakeholders). Institutionalism can lead to homogeneity,
which is developed by three core mechanisms: mimetic forces (pressure to copy from other
organizations as responses to uncertainty), coercive forces (pressure to change from power
differences and political influences), and normative forces (common training and
Chapter 6: Designing Organizations for the International Environment
Three primary motivations for expanding to the global scale are: economies of scale,
economies of scope (larger testing of standards), and to achieve scarce or low-cost factors of
productions such as labor, raw materials, or land. One way to expand globally is to develop
internal partnerships. The phases of expansion to a global scale are: domestic orientation,
international orientation, multinational orientation, and global orientation. Structures include
having an international division, an international product structure, geographic structures, a
matrix structure, or a hybrid structure. It is harder to integrate global organizations. Many
organizations are shifting to a transnational model.
An encyclopedic review of strategy research by de Wit and Meyer classifies the study of
strategy into the three headings we have used in this section – strategy content, strategy context,
and strategy process (de Wit & Meyer, 2005). They identify three main clusters of strategy
content: business strategy, corporate strategy, and network strategy (Gulati, Nohria, & Zaheer,
2000). They identify three main clusters of strategy context research: international, industrial,
and organizational. Finally, they identify three main clusters of strategy process research:
strategic change, strategy formation, and strategic thinking (Mintzberg, 1973; , 1978;
Mintzberg, 1994; Mintzberg & McHugh, 1985; Mintzberg, Quinn, & Ghoshal, 1995; Mintzberg,
Raisinghani, & Theoret, 1976; Mintzberg & Waters, 1982; , 1985). Strategic change has been
reviewed above in the section on organizational behavior, organizational development/design,
and organizational change. Strategy formation will be reviewed below in the section on rational
actors, bureaucratic politics, and organizational processes as models of organizational decision
processes. In addition, we have presented leadership, structure, culture, and strategy as
processes rather than things, largely influenced by the work of Herbert Simon, James March,
and Karl Weick.
Mintzberg, Henry, (1979). The structuring of organizations a synthesis of the research.
Englewood Cliffs, N.J.: Prentice-Hall.
A great leader builds, maintains, and presides over an organization that makes thousands
of good decisions every day. Graham Allison’s study of the Cuban Missile Crisis has been used
to train organizational strategists since 1969, and provides a useful bridge between the business
strategy community and the national strategy community (Allison, 1969; , 1971; Allison &
Rational Actor Model
Similar to the “great man” theories of leadership, the “rational actor” theories of
decision processes are often used as a foil against which more accurate models of human
behavior can be contrasted. Complex organizational processes are often simplified into rational
actor models after the fact, people strive to make rational-looking decisions, and there is
symbolic value in terminating a decision process through an announcement by a leader
buttressed with the trappings of rational decision processes. Rationality, though, is a social
construction that varies from one context to another: caribou hunters in Newfoundland find
scapulamancy (reading cracked shoulder blades) to be a rational decision process, while
Madison Avenue marketing professionals find marketing data from focus groups to be a rational
Daft, Richard L., (2004). Organization theory and design. Mason, Ohio,
Chapter 12: Decision-Making Processes
Most organizational decisions are not made in a logical, rational manner. Most decisions
do not include careful analysis of the problem, systemic analysis of alternatives, and finally
implementation of a solution. Decision processes are characterized by conflict, coalition
building, trial and error, speed, and mistakes. Managers have bounded rationality, and must
sometimes operate by hunch and intuition. Organizational decisions are made by a social
process, not by a single individual. The greatest amount of conflict occurs when people
disagree on the problems. Priorities must be established. Managers can lose support for
addressing a problem people don’t agree with. Managers should build coalitions during
problem identification. If technical knowledge is low, the solution often comes through
incremental trials that gradually lead to an overall solution.
The Garbage Can Model: Decisions, problems, ideas and people flow through
organizations and mix together in various combinations. The organization gradually learns.
Organizations must make decisions quickly. Mistakes will be made. Encouraging trial-
and-error facilitates organizational learning. Unwillingness to change from a failing course of
action can be detrimental.
Bureaucratic Politics Model
The bureaucratic politics model described by Allison and Halperin is imbued with
political science assumptions about the value of “pulling and hauling” between different self-
interested actors (Pfeffer, 1981). In Allison’s analysis of the Cuban Missile Crisis, he presents
three models: the Rational Actor model is artificially rational, the Organizational Processes
model is too manifestly counter-rational, and the Bureaucratic Politics model bounds rationality
by tying it to organizational interests (Allison, 1971). Political science and organization theory
intersect on the subject of bureaucratic politics, and on the anlayis of power more generally.
Power is one of ten organization theories represented in Baum’s The Blackwell Companion to
Organizations (Brass, 2002; Mizruchi & Yoo, 2002; Ocasio, 2002). Bureaucratic influence is
not necessarily detrimental. One solution to “groupthink” limitations, for example, is
bureaucratic politics (Janis, 1972), because minority influences increase cognitive effort devoted
to a problem (Nemeth, 1986). Many of the findings from social psychological studies of group
decision-making emphasize the value of bringing different perspectives to bear on a problem
(Dearborn & Simon, 1958).
Daft, Richard L., (2004). Organization theory and design. Mason, Ohio,
Chapter 13: Conflict, Power, and Politics
Differences in goals, backgrounds, and tasks are necessary, but also can create conflict.
Managers use power and politics to manage and resolve conflicts. The rational model of
organization assumes organizations have specific goals and that problems are solved
logically. The political model assumes goals are not specified or agreed upon. Departments
have different values and interests. Decisions are based on power and politics. Outcomes are
decided through bargaining, negotiation, persuasion, and coalition building. Vertical sources
of power include formal position, resources, control of decision premises, and network
centrality. With increasingly uncertain environments, top executives are increasing the power
of middle managers and lower-level employees. Dependency, resources and non-
substitutability determine the influence of departments. People generally distrust political
behavior. Politics is often needed to achieve department and organizational goals. Politics
play a role in structural change, management succession, and resource allocation. Although
politics can be beneficial, managers should try to enhance collaboration so that conflict does
not become too strong. Managers can enhance collaboration through integration devices,
confrontation and negotiation, inter-group consultation, member rotation, shared mission and
Pfeffer, J. 1981. Power in organizations. Boston: Pitman Press.
Brass, D. J. 2002. Intraorganizational power and dependence. In J. A. C. Baum
(Ed.), The Blackwell Companion to Organizations: 138-157. Oxford: Blackwell.
Ocasio, W. 2002. Organizational power and dependence. In J. A. C. Baum (Ed.),
The Blackwell Companion to Organizations: 363-385. Oxford: Blackwell.
Mizruchi, M. S., & Yoo, M. 2002. Interorganizational power and dependence. In J.
A. C. Baum (Ed.), The Blackwell Companion to Organizations: 599-620. Oxford:
Organizational Processes Model
Herbert Simon shifted the agenda away from individuals (organizational behavior) and
bureaucracies (complex organizations) toward complex organizational processes such as
information-processing, decision-making, organizational change, and strategy formation
(Simon, 1976). Simon was awarded the Nobel prize in economics for his argument that human
beings are not able to create optimized decision processes because they have “bounded
rationality” – information costs, time costs, and energy costs must be factored into decision
processes. Human decision-makers “satisfice” instead of “optimize” in decision-making
processes. The Carnegie school of decision researchers that Simon created (Cyert & March,
1963; March & Simon, 1958) was used by Allison in his 1971 description of a third model of
decision-making. The Cuban Missile Crisis was the first influential demonstration of the value
of the Carnegie School’s approach to complex organizational decision processes (Cohen,
March, & Olsen, 1972; March & Olsen, 1976a).
Simon, Herbert, (1946), “The Proverbs of Administration,” in Shafritz, J. M., &
Hyde, A. C., (Eds.), (1992), Classics of public administration (pp. 107-122).
Brooks/Cole series in public administration. Pacific Grove, Calif, Brooks/Cole Pub.
It is hard to make proverbs for administration because it is a field with so much room for
debate. However, there are some accepted administrative principles: 1. specialization will
increase efficiency, 2. creating a determinate hierarchy of authority will increase efficiency
(unity of command), 3. limiting span of control to a small number will increase efficiency, 4.
grouping workers for purposes of control to (a) purpose, (b) process, (c) clientele, or (d)
place will increase efficiency. These administrative principles are quite clear and should be
able to solve all administrative problems, yet that does not happen.
These principles are mutually incompatible, and have their own nuances. Specialization
can lead to efficiency, but also too much rigidity during a certain phase in an organization’s
pursuit of its objectives. An organization must specialize efficiently. The purpose of unity of
command is to have experts make decisions, but sometimes the expert is unable to issue
commands on particular issues outside of the command, such as when an issues falls across
stovepipes, or when a subordinate must seek approval by his/her supervisor. In this situation
a process of adjudication must be created, but when this happens, specialization is lost. Span
of control calls for minimization of breadth, yet this contradicts the desire to minimize levels
of hierarchy. Too large a breadth will interfere with specialization, as the decision-maker
oversees more things in which he/she is not an expert. Purposes, processes, clientele, or
places also compete as the point around which an organization should organize. The terms
are also ambiguous. Purpose and process can mean the same thing, such as how when typing
is the purpose and process of a typist. Clientele can be the same as an area. There is no
method to clarify these problems. To demonstrate these problems, suppose the government is
going to teach farmers the latest agricultural best practices. It could use either the Department
of Education or the Department of Agriculture. With the Department of Education, the
government will use the best teaching techniques, but may not teach the best agriculture
techniques. With the Department of Agriculture, the government may teach the best
agriculture techniques, but without the best teaching techniques. All the principles of
administrative theory are now demonstrably less valuable.
However, the diminution of these principles has not made administration unsalvageable.
The principles serve the purpose of measurement, so that in building a structure, one can use
these principles to construct it with the right proportions and balance, as one would with the
rooms of a house. Although this settles the question of the principles of administration, upon
further examination, other considerations arise. Administrative theory must look at
describing administrative situations, such as where decisions are made, and lines of
communication. The aim of administration is efficiency, and the simplest method to examine
efficiency is by examining input and output and the limits to performance. Individuals can be
limited by skills, habits, and reflexes, or values, conception of purpose, loyalty, or
motivation. In the case of individuals, training is imperative in improving performance – to
make behavior rational for completing the aims of the organization. In this sense,
administrative theory is concerned with the non-rational limits of the rational – the more
rationality, the less important the structure.
Wildavsky, Aaron, (1969), “Rescuing Policy Analysis from PPBS,” in Shafritz, J.
M., & Hyde, A. C., (Eds.), (1992), Classics of public administration (pp. 332-345).
Brooks/Cole series in public administration. Pacific Grove, Calif, Brooks/Cole Pub.
Wildavsky, Aaron, (1972), “The Self-Evaluating Organization,” in Shafritz, J. M., &
Hyde, A. C., (Eds.), (1992), Classics of public administration (pp. 412-427).
Brooks/Cole series in public administration. Pacific Grove, Calif, Brooks/Cole Pub.
Cohen, M. D., March, J. G., & Olsen, J. P. 1972. A garbage can model of
organizational choice. Administrative Science Quarterly, 17: 1-25.
Managers must master leadership, organization, strategy, and information. Two
important theoretical approaches to information management are learning theories and
sensemaking theories. In this section we focus attention on the large literatures under the
general topic of learning. Individual-level learning captures the fields of Human Resource
Management, Human Resource Development, and Career Theories, as well as some psychology-
based theories of knowledge transfer from teachers to learners. Team-level learning captures
literature on group dynamics, social psychological approaches to decision-making, and
managerial studies of high-performing teams. Organizational-level learning captures research
on organizational learning, learning organizations, knowledge management, and dynamic
capabilities. The rise of “lessons learned” cells throughout the national security community
indicates that national security managers have added a fourth generation of information
(learning and sensemaking) processes to previous investments in leadership, organization, and
Much of a manager’s time is spent in absorbing information from others or
communicating information to others – learning and teaching. Consequently, several fields of
research within organization and management theory touch on individual-level learning
processes. The field of Human Resource Management is structured around the movement of
individuals through an organizational pipeline: recruitment, selection, orientation, training,
development, benefits, motivation, leadership, work-family issues, employee asssistance
programs, diversity, legal issues, termination, and retirement. Human Resource Development
(HRD) is a subset of Human Resource Management (HRM) that focuses attention on
socialization, training, development and other education-based methods for improving the value
of human assets controlled by the organization. Career theorists focus attention on adult
development and adult learning from the individual’s interests, not necessarily the
organization’s interests. (HRM researchers and HRD researchers are often disparaged as
“servants of power” (Baritz, 1960), while career theorists see themselves as working for
individual development (Arthur, 1994). Adult Development research and Adult Learning
research are often used to inform HRM, HRD, and Career research, but do not have a strong
connection to the goals of management research. Behavioral Decision Theorists and Game
Theorists study how learning from experience can shape subsequent decisions – making them
worse through superstitious learning dynamics or better through disconfirmed hypotheses
dynamics (Einhorn, 1982). Individual-level learning studies are plentiful – largely because it is
easier to study individuals than teams, organizations, or networks. The challenge for
management researchers is to connect individual-level research to higher levels of analysis. For
example, one stream of research focuses on individual-level learning as the building block of
organizational-level learning, suggesting that how individuals throughout the organization learn
to adapt to complex tasks can spread throughout the organization to create portfolios of effective
organizational routines (Cohen, 1991).
Arthur, M. B. 1994. The boundaryless career: A new perspective for organizational
inquiry. Journal of Organizational Behavior, 15(4): 295-306.
Team-level learning captures literature on group dynamics, social psychological
approaches to decision-making, and managerial studies of high-performing teams. A frequently
cited model of group dynamics is “forming (creation), storming (conflict), norming (settlement of
norms), performing (performance)” but more sophisticated research suggests that each project a
new or established team encounters follow familiar rhythms (Ancona & Caldwell, 1992; Gersick,
1988). As the “great man” model of leadership has been shown to be a weak practical approach
to complex problems, more research has been conducted – not on CEOs, but on “Top
Management Teams” or TMTs (Finkelstein, 1992; Hambrick, 1981a; 1981b). Much of the
research on high-performing teams suggests that team pathologies, such as “groupthink” (Janis,
1971; Janis, 1972) can be counteracted by a variety of mechanisms such as the insertion of
diverse perspectives into the team (Nemeth, 1986; Nemeth & Staw, 1989). One emergent finding
from diverse research streams within the category of team-level learning is that a belief in
“calculated rationality” can create rigidities that do not allow for the emergence of “systemic
rationality,” such as trial-and-error learning within teams (March, 1978).
Janis, I. L. 1972. Victims of groupthink: A psychological study of foreign-policy
decisions and fiascoes. Boston: Houghton, Mifflin.
Gersick, C. J. G. 1988. Time and transition in work teams: Toward a new model of
group development. Academy of Management Journal, 31: 9-41.
The Simon-March-Weick research tradition shifted the emphasis in organization theory
away from boxes on organization charts and other organizational reifications (environment,
structure, strategy, culture) toward complex organizational processes (leading, changing,
organizing, culturing, strategizing, decision-making, learning, and sensemaking). An important
early study of organizational learning processes was the “garbage can” school – in which
random streams of problems, solutions, people, and choice opportunities flow into a
metaphorical container – established at University of California-Irvine in the 1970s by Jim
March and his colleagues (Christensen, 1976; Cohen & March, 1976; Cohen, March, & Olsen,
1976; Enderud, 1976; Kreiner, 1976; March & Olsen, 1976a; 1976b; 1976c; 1976d; Olsen,
1976a; 1976b; 1976c; 1976d; Rommetweit, 1976; Stava, 1976; Weiner, 1976). Later reviews of
the emerging fields of organizational learning were published by Fiol and Lyles (1985), Levitt
and March (1988), and March (1991). The research on organizational learning processes was
merged with systems theory and popularized by Peter Senge as “learning organizations”
(although it is hard to imagine the existence of an “unlearning organization”) (Senge, 1990).
Strategy researchers have adopted organizational learning processes as a potential source of
competitive advantage: some organizations are designed to learn more quickly than other
organizations (Adler, 1992; Adler & Cole, 1993), some organizations have higher levels of
“absorptive capacity” than other organizations (Cohen & Levinthal, 1990); and organizations
that have “dynamic capabilities” can be more successful than organizations that have “static
capabilities” (Eisenhardt & Martin, 2000). Many of the ideas of organizational learning
research have migrated into the field of information systems, information technology, and
knowledge management (Hansen, Nohria, & Tierney, 1999). The early studies of organizational
learning published in 1976 have grown into a large and vibrant field of research and practice –
including a new executive program at Wharton Business School that trains people to be “Chief
Daft, Richard L., (2004). Organization theory and design. Mason, Ohio,
Chapter 8: Information Technology and Control
How organizations collect, store, distribute and use information influences performance.
Transactional processing systems, data warehousing, and data mining help flatten
organizational ranks. Management information systems, reporting systems, decision support
systems, and executive information systems help support top and middle level management.
Management control systems include budgets and financial reports, periodic non-financial
statistical reports, reward systems, and quality control systems. Balanced scorecards provide
managers with a balanced view of the organization by integrating traditional financial
measurements and statistical reports with a concern for markets, customers, and employees.
IT systems include intranets, enterprise resource planning (ERP, and knowledge
management, which improve coordination and flexibility. Systems that support and
strengthen external relationships include EDI networks, the integrated enterprise
(coordination between partners, suppliers, and customers), and e-business. IT is allowing
more modular structures to develop. Implications include smaller organizations,
decentralized structures, and improved internal and external coordination.
March, J. G., & Olsen, J. P. 1976a. Ambiguity and choice in organizations. Bergen,
Senge, Peter M, (1990). The fifth discipline the art and practice of the learning
organization. New York, Doubleday/Currency.
March, J. G. 1991. Exploration and exploitation in organizational learning.
Organization Science, 2: 71-87.
The knowledge management literature has yielded two general groups of studies: one
group that treats knowledge as a durable object that can be transferred, stored, accessed, and
used; and one group that treats knowledge as an ephemeral social construction that must be
created, is difficult to move across boundaries (“sticky”), is “recontextualized” in moving from
one context to another, is subject to decay and destruction, and must be “reaccomplished” from
day to day. The first group is most comfortable with the metaphor of “learning” (in which a
teacher passes knowledge to a learner) and the second group is most comfortable with the
metaphor of “sensemaking” (in which organization members work together to create a sensible
environment). Herbert Simon is primarily associated with the organizational process of
decision-making; James March is primarily associated with the organizational process of
learning; and Karl Weick is primarily associated with the organizational process of sensemaking
(Weick, 1995). In high-hazard environments, such as those faced daily by numerous components
of the U.S. national security community – aviation, naval, nuclear, medical, weapons, natural
disasters, terrorism, space – leaders who understand organizational sensemaking processes can
deter catastrophes (Perrow, 1984).
The core concept of the study of enactment – best captured in Weick’s early research
(Weick, 1977) -- is that organization members create the environments to which they must then
respond (Weick, 1979). Burrell and Morgan’s review of organizational sociology and
organization theory classified research and theory into a two-by-two matrix that makes a similar
point (if rotated 45 degrees to become a diamond): researchers who believe in an objective
reality and stability are “functionalists”; researchers who believe in an objective reality and
change are “radical structuralistis”; researchers who believe in a subjective reality and stability
are “interpretivists”; and researchers who believe in a subjective reality and change are
“radical humanists” (Burrell & Morgan, 1979). If we slice the diamond into three parts – left
(functionalist); middle (radical structuralist and interpretivist), and right (radical humanist) –
we get three different approaches to organizations – “objective world,” “subjective world,” and
“enactive world” (Smircich & Stubbart, 1985). Managers with a low locus of control believe
that there is an objective world that must be responded to; managers with a high locus of control
believe that there is an enactive world that we can influence (what did we do or not do to create
the environment to which we must now respond, and what actions on our part will enact a more
favorable environment to which we must respond in the future?).
Weick, K. E. 1979. The social psychology of organizing (Second ed.). Reading, MA:
Smircich, L., & Stubbart, C. 1985. Strategic management in an enacted world.
Academy of Management Review, 10: 724-736.
Weick identified seven characteristics of organizational sensemaking processes: (1)
ongoing streams of events, (2) bracketed cues, (3) social, (4) identity, (5) retrospective, (6)
plausible stories, and (7) “enactive of sensible environments” (Weick, 1995). An understanding
of sensemaking episodes helps ground sensemaking theory in practice; in a sensemaking episode
people in organizations move from an orderly context to a chaotic context and then reconstruct a
new orderly context (Orton, 2000). First, the ongoing stream of events is likely to include some
disruptive “environmental jolts” (Meyer, 1982) that – when bracketed for further attention --
can trigger a process of “sense-losing” (Orton, 2000). Second, this can, and indeed should, lead
to a process of “schizoid incoherence” in which diverse problems swim up against diverse
solutions in search of effective “recombinant innovations” (Cohen, March, & Olsen, 1972;
Dhillon & Orton, 2001). The structural constraints that Weick identified on this middle process
include the tendency of human beings to make sense of novel events in social contexts (social), to
make sense of novel events in a way that preserves and enhances our images of ourselves
(identity), and to make sense of novel events through constant reshuffling of past events and
beliefs (retrospective). Third, organization members strive to reaccomplish order through the
construction of plausible stories that build together to enact a new sensible environment.
Sensemaking researchers are trying to understand a diverse set of sensemaking episodes,
ranging from jazz orchestra performances (Hatch, 1999) and Atlanta Symphony Orchestra
(Glynn, 2000) to the Cuban Missile Crisis (Orton, 1998) and the 1976 reorganization of the U.S.
national security community (Orton, 2000).
Weick, K. E. 1993. The collapse of sensemaking in organizations: The Mann Gulch
disaster. Administrative Science Quarterly, 38: 628-652.
Weick, K. E. 1995. Sensemaking in organizations. Newbury Park, CA: Sage
High Reliability Organizations
The third generation of organizational sensemaking research is its application and
reformulation to explain high-hazard environments. A conference in February 2008 will focus
on the management of “extreme environments” and a special issue of Leadership Quarterly in
2009 will focus on “leadership in extreme environments.” The best-known early case study from
the field of High Reliability Organizations is Graham Allison’s account of decision processes
during the Cuban Missile Crisis (Allison, 1971). Several researchers writing in the post-Viet
Nam era tried to understand how complex organizational processes could blind people to
emerging catastrophes or create vicious cycles that could lead to larger negative outcomes from
crises (Staw, Sandelands, & Dutton, 1981). President Carter appointed organizational
sociologist Charles Perrow to the Three Mile Island commission (Perrow, 1981), and Perrow
expanded his study to include chapters reviewing catastrophes from nuclear, petrochemical,
aviation, naval, “earth-based” (dam breaks, earthquakes), and “exotic” (space, military, genetic
engineering) environments (Perrow, 1984). Soon after Perrow’s book was published,
researchers encountered the Chernobyl, Bhopal, and Challenger accidents, which drew in a new
generation of management researchers devoted to the prevention, mitigation, and recovery from
organizational catastrophes (Weick & Sutcliffe, 2001).
Perrow, C. 1984. Normal accidents: Living with high-risk technologies. New York:
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