Why Study Organizational Theory

What is Organizational Behavior?

Organizational behavior is the field of study that investigates how organizational structures affect behavior within organizations.

Learning Objectives

Define organizational behavior and the way in which computer modeling and systematic frameworks enable further study

Key Takeaways

Key Points

  • Organizational behavior studies organizations from multiple viewpoints, including behavior within the organization and in relation to other organizations.
  • Micro organizational behavior refers to individual and group dynamics in an organizational setting.
  • Macro organizational theory studies whole organizations and industries, including how they adapt, and the strategies, structures, and contingencies that guide them.
  • Concepts such as leadership, decision making, team building, motivation, and job satisfaction are all facets of organizational behavior and responsibilities of management.
  • Organizational behavior also deals heavily in culture. Company or corporate culture is difficult to define but is extremely relevant to how organizations behave.

Key Terms

  • behavior: The way a living creature acts.

Definition of Organizational Behavior

Organizational behavior studies the impact individuals, groups, and structures have on human behavior within organizations. It is an interdisciplinary field that includes sociology, psychology, communication, and management. Organizational behavior complements organizational theory, which focuses on organizational and intra-organizational topics, and complements human-resource studies, which is more focused on everyday business practices.

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Behavior model: Diagram of Schein’s organizational behavior model, which depicts the three central components of an organization’s culture: artifacts (visual symbols such as office dress code), values (company goals and standards), and assumptions (implicit, unacknowledged standards or biases).

Different Types of Organizational Behavior

Organizational studies encompass the study of organizations from multiple perspectives, methods, and levels of analysis. “Micro” organizational behavior refers to individual and group dynamics in organizations. “Macro” strategic management and organizational theory studies whole organizations and industries, especially how they adapt, and the strategies, structures, and contingencies that guide them. Some scholars also include the categories of “meso”-scale structures, involving power, culture, and the networks of individuals in organizations, and “field”-level analysis, which studies how entire populations of organizations interact.

Many factors come into play whenever people interact in organizations. Modern organizational studies attempt to understand and model these factors. Organizational studies seek to control, predict, and explain. Organizational behavior can play a major role in organizational development, enhancing overall organizational performance, as well as also enhancing individual and group performance, satisfaction, and commitment.

Topics in Organizational Behavior

Organizational behavior is particularly relevant in the field of management due to the fact that it encompasses many of the issues managers face on a daily basis. Concepts such as leadership, decision making, team building, motivation, and job satisfaction are all facets of organizational behavior and responsibilities of management. Understanding not only how to delegate tasks and organize resources but also how to analyze behavior and motivate productivity is critical for success in management.

Organizational behavior also deals heavily in culture. Company or corporate culture is difficult to define but is extremely relevant to how organizations behave. A Wall Street stock-trading company, for example, will have a dramatically different work culture than an academic department at a university. Understanding and defining these work cultures and the behavioral implications they embed organizationally is also a central topic in organizational behavior.

Why Study Organizational Theory?

Organizational theory studies organizations to identify how they solve problems and how they maximize efficiency and productivity.

Learning Objectives

Define the value and applications of organizational theory from a business perspective.

Key Takeaways

Key Points

  • Correctly applying organizational theory can have several benefits for both the organization and society at large. Developments in organizations help boost economic potential in a society and help generate the tools necessary to fuel its capitalistic system.
  • Once an organization sees a window for expansion, it begins to grow and thus alters the economic equilibrium by catapulting itself forward. This expansion induces changes not only in the organization’s infrastructure but also in competing organizations and the economy as a whole.
  • One example of how development in organizational theory improves efficiency is in factory production. Henry Ford created the assembly line, a system of organization that enabled efficiency and drove both Ford and the U.S. economy forward.

Key Terms

  • efficiency: The extent to which a resource, such as electricity, is used for the intended purpose; the ratio of useful work to energy expended.
  • normative: Of, pertaining to, or using a standard.

Definition of Organizational Theory

Organizational theory studies organizations to identify the patterns and structures they use to solve problems, maximize efficiency and productivity, and meet the expectations of stakeholders. Organizational theory then uses these patterns to formulate normative theories of how organizations function best. Therefore, organizational theory can be used in order to learn the best ways to run an organization or identify organizations that are managed in such a way that they are likely to be successful.

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Organizational theory and stakeholders: Organizational theory examines patterns in meeting stakeholders’ needs. This concept map illustrates common internal and external stakeholders: internal stakeholders include employees and managers, while external stakeholders include customers, suppliers, creditors, and society at large. A company must take all of these stakeholders’ interests into account.

Organizational Theory

Correctly applying organizational theory can have several benefits for both the organization and society at large. As many organizations strive to integrate themselves into capitalistic societies, they initiate a ripple effect between other competing firms and already-existing economic pressures. Once an organization sees a window for expansion, it begins to grow by producing more and thus alters the economic equilibrium by catapulting itself forward into a new environment of production. This expansion induces changes not only in the organization’s infrastructure but also in competing organizations and the economy as a whole. Other firms observe these innovative developments and recreate them efficiently. Developments in organizations help boost economic potential in a society and help generate the tools necessary to fuel its capitalistic system.

One example of how development in an organization affects the modern era is through factory production. The concept of factory production amplified production as a whole and allowed for the organized division of labor to start. It centralized facets of the workforce and began to define the rules of production and trade, which also led to specialization. Henry Ford implemented an innovative design by modifying factory production and creating the assembly line, which is still used in many factories in contemporary society. These developments make it easier for a company to produce and thus incentivize firms to aggregate and utilize more efficient methods for running their companies.

Organizational theory can also help identify malicious forms of corporate practice and use them to highlight future precautionary measures. The nuclear accident at Three Mile Island helped determine ways to ensure the prevention of similar incidents. In that case, developments in organizational theory led to stronger government regulations and stronger production-related safety mandates.