C lassics O F O rganization T heory F E ifth dition J M. S ay hafritz J. S O teven tt Classics of Organization Theory Fifth Edition ®I m <Jl Harcourt m x:>: :/ College Publishers » • jj ill ::¾ A Harcourt Higher Learning Company mmm Now you will find Harcourt Brace's distinguished innovation, leadership, and support under a different name . . . a new brand that continues our unsurpassed quality, service, and commitment to education. 4:1 We are combining the strengths of our college imprints into one worldwide brand: SI Harcourt p:;' fj> I f-' Our mission is to make learning accessible to anyone, anywhere, anytime— reinforcing our commitment to lifelong learning. We are now Harcourt College Publishers. Ask for us by name. ::f' 11¾ Ilf;' ||4. - Classics of Fifth Edition Jay M. Shafritz University of Pittsburgh J. Steven Ott University of Utah Harcourt College Publishers Fort Worth Philadelphia San Diego New York Orlando Austin San Antonio Toronto Montreal London Sydney Tokyo Publisher Earl McPeek Executive Editor David Tatom Market Strategist Laura Brennan Developmental Editor Katie Stevens Project Manager Barrett Lackey ISBN: 0-15-506869*5 Library of Congress Catalog Card Number: (XL 103359 Copyright © 2001 by Harcourt, Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without permission in writing from the publisher. Requests for permission to make copies of any part of the work should be mailed to the following address: Permissions Department, Harcourt, Inc., 6277 Sea Harbor Drive, Or­ lando, Florida 32887^6777. Portions of this work were published in previous editions. Address for Domestic Orders Harcourt College Publishers, 6277 Sea Harbor Drive, Orlando, FL 32887-6777 800-782-4479 Address for International Orders International Customer Service Harcourt College Publishers, 6277 Sea Harbor Drive, Orlando, FL 32887-6777 407-345-3800 (fax) 407-345-4060 (e-mail) [email protected] Address for Editorial Correspondence Harcourt College Publishers, 301 Commerce Street, Suite 3700, Fort Worth, TX 76102 Web Site Address http:// www.harcourtcollege.com Printed in the United States of America 0 1 2 3 4 5 6 7 8 9 066 9 8 7 6 5 4 3 2 Harcourt College Publishers Foreword In this anthology of classical works in organization theory, Shafritz and Ott have captured the essence, if not all the details, of an extensive and intricate subject. This assertion re­ quires asking ourselves, what is the “essence” of organization theory? Put another way, what was the fundamental problem that the classic writers were trying to resolve? The answer to these questions is found in the fourth selection in this book, in Henry Towne’s paper, “The Engineer as an Economist.” One needs only to ponder Townes title to find the motive behind most of the classicists’ work. Ask yourself, what do engineers and economists have in common? Without too much effort I am sure you will conclude, “the quest for efficiency.” Towne’s linking of management with its root sciences of engineering and economics through the concept of efficiency (E = O/I) was a brilliant stroke that has to be one of the great monuments of managerial lucidity. It is not as if the concept of efficiency had gone unnoticed before Towne wrote of it. Indeed, even in biblical times, Jethro, Moses’ father-in-law, advised Moses to set up a chain of command and to delegate most of his decision-making authority to lower levels, because trying to do it all himself was inefficient (Exodus: Chapter II18:9). However, prior to Towne’s work, there was little systematic knowledge of administration. As a matter of fact, the idea of “management” was barely realized and the notion of “executive” hardly understood. But Towne wrote at a propitious time. He was driven by the Progressive Movement’s re­ form endeavors and took the first steps to create a scientific body of thought that applied to the administration of public and private organizations. In this regard, the Scientific Management movement was a product of both Progressivism and Towne’s attempt to get those people interested in management to contribute to the annual proceedings of the American Society of Mechanical Engineers. Frederick W. Taylor’s epic paper “A Piece- Rate System,” written in 1895, was a result of Towne’s request. Scientific Management was all about the efficiency of resource utilization based upon the collection of data and the rational analysis of that data. Organizational performance would be enhanced, so the scientific management pioneers believed, if management had at its disposal objective facts for making decisions, as opposed to the intuitive or rule of thumb methods used in the past. Thus science and rationality became the watchwords of efficiency. But organization theory was more than “facts,” as Bacon said, “like grapes, ripe and ready for plucking.” Facts required a framework for understanding and this is where pertain the contributions, between the two World Wars, of the great builders of classical organizational theory. They are represented in this volume by Max Weber, Chester I. Barnard, and Luther Gulick. These writers proposed two enduring themes in organization theory The first theme is purely structural, that is, according to what methods and principles an organiza­ tion arranges its functions to maximize coordination. This issue concerns the never ending problem of achieving a balance between vertical and horizontal differentiation, in other words between hierarchy and the division of labor. VI Foreword The second theme concerns cooperation, and it was a matter dear to Chester Barnard. He was the first practicing manager to recognize that the applied behavioral sciences could be useful to management as means to motivate workers and to encourage them to have a pleasing view of their work situation. Drawing in part upon the Hawthorne studies in hm man relations, Barnard’s book, The Functions of the Executive, became recognized as the paradigmatic statement of modern managerialism. He stressed that cooperation was based upon the mutual interest that workers and managers had in the success of an enterprise. But he went further to show that management had to be proactive in nurturing that sense of mutual interest by using the applied behavioral sciences to influence the attitudes and actions of subordinates. Lest we risk losing the point, let me reemphasize that the great twin themes of coordb nation and cooperation in organization theory were in fact creatures of efficiency, that most fundamental of all organizational imperatives. These themes, blossoming in the uv terwar years, reached full bloom by midcentury, exemplified in the work of Herbert A. Si' mon, Richard M. Cyert, and James G. March. Drawing upon Barnard’s inspiration, these writers viewed management as a process imbedded in a system of patterned relationships. During the 1960s, systems theory emerged and tried to do what Barnard had all along hoped to see done, to develop a general theory of interrelationships and interdependent cies that explained the behavior of complex organizations. Systems theory in management came to naught, however, largely because it did not move beyond the normative to include a descriptive, quantitative side that had any degree of generality. Through most of the 1970s, 1980s, and 1990s, organization theory frag' mented with the theme of coordination pursued by the structuralists, the theme of coop' eration explored by the behavioralists, and the idea of efficiency all but disappearing in the ensuing flood of specialist literature. The last chapters of this volume (Chapters V through IX) reflect this trend with subjects such as culture, gender, ecology, information technoh ogy, and on and on, tending to suggest that management is slipping into postmodern anarchy. It takes a great deal of perspicacity to assemble a collection of readings that reflects the changes that organization theory went through during this century. The editors of this book deserve our admiration. One can hope that in their next edition the editors will find evidence in the literature that the field is rediscovering some of the fundamentals with which it began. This is not a plea for organizational revisionism, but for theoretical coherence. William G. Scott Professor of Management University of Washington Preface Classics of Organization Theory is a collection of the most important works in organization theory, written by the most influential authors in the field. Classics does not just tell the reader what the “masters” said, it presents their works in their own words. These are theo- ries that have withstood the test of time — the critically acclaimed masterworks in the field. Although this book contains a sprinkling of important current works, its focus is the enduring classics. It tells the history of organization theory through the words of the great theorists. Classics is designed to help people who are new to the field of organization theory “get into,” understand and appreciate its important themes, perspectives, and theories. Thus, we describe and explain what organization theory is, how it has developed, and how its de- velopment coincides with developments in other fields, as well as the contexts in which these great works were written. Most of the articles are organized chronologically within major perspectives or “schools” of organization theory. Each chapter focuses on one major perspective of organic zation theory. Readers thus can immerse themselves in one perspective at a time, before moving on to the next. The chapters (and the major perspectives of organization the' ory) are: • Classical Organization Theory • Neoclassical Organization Theory • Human Resource Theory, or the Organizational Behavior Perspective • “Modem” Structural Organization Theory • Systems Theory and Organizational Economics • Power and Politics Organization Theory • Organizational Culture and Sense Making • Organizational Culture Reform Movements • Postmodernism and the Information Age Several other features that help to make Classics “reader friendly”: • The Introduction explains why there are competing perspectives or frames for grouping the­ ories of organization, and why we chose the particular framework that is used in Classics. • The Introduction explains how theories of organization reflect what is going on in the world at the time (for example, World War II or the “flower child”/antiestablishment/self- development era of the 1960s); defines the criteria used for including and excluding works (for example, “Should the serious student of organization theory be expected to be able to identify this author and his or her basic themes?”); and presents the organizing framework for the book. vu Vili Preface • The Introduction contains a chronology of important events and contributions to the field of organizational theory from 1491 b.c. into the 1990s. The chronology allows one to see the intellectual development of the myriad themes and perspectives of organization theory, and to comprehend the impact of time and context on the development of perspectives across the field. • The opening pages of each chapter identify the central themes and issues of the perspective, contrast the perspective with others, and briefly summarize the contributions each article has made to the field. • Most of the articles have been shortened to make them more readable. The editing down helps readers to focus on the central ideas that make an article a classic. • Each chapter contains a bibliography of the most important books and articles from the pen spective (whether or not the works are reproduced in Classics). CH A N G ES FRO M TH E FO U R TH ED ITIO N T O TH E FIFT H ED IT IO N The fourth edition incorporated major changes from the third edition. A number of friendly critics had repeatedly asked us to update the book’s coverage — to bring the book “into the 1990s.” Other reviewers, though, had urged us to resist the temptation to ven­ ture into theories that had not passed the test of time. We had taken a firm position up through the third edition, but we softened our stand somewhat in the fourth. In attempt­ ing to walk a fine line between the classics and newer areas of theory, we incorporated or­ ganizational economics, information technology, postmodernism, feminist theory, diver­ sity, and multiculturalism. The fifth edition retains the same chapters as the fourth, but a number of readings have been added and others deleted. Chapter V, “Systems Theory and Organizational Eco­ nomics,” and Chapter IX, “Postmodernism and the Information Age,” have been reworked quite substantially. As in the fourth edition, the most recently written inclusions are largely in the concluding three chapters. Thus, readers who want only “pure classics” of organization theory probably should put this book down after reading Chapter VI. Those who also want exposure to some of the emerging perspectives of organization should ven­ ture into Chapters VII, Vili, and IX. As William G. Scott has written in the Foreword, “Through most of the 1970s, 1980s, and 1990s, organization theory fragmented . . . The last chapters of this volume (Chapters V through IX) reflect this trend . . . tending to sug­ gest that management is slipping into postmodern anarchy.” Although it is always difficult to select enduring classics from among the rich choices available, we believe we have ac­ complished this goal in the fifth edition. The following selections, listed by chapter, have been added and deleted: Chapter II. Neoclassical Organization Theory New Addition Robert K. Merton, “Bureaucratic Structure and Personality” (1957) in. Chapter Human Resource Theory, or the Organizational Behavior Perspective Deletion from the Fourth Edition Taylor H. Cox, Jr., “Intergroup Conflict” (1993) Preface IX New Additions Fritz J. Roethlisberger, “The Hawthorne Experiments” (1941) Bart Victor and Carroll Stephens, “The Dark Side of the New Organizational Forms” (1994) Chapter V. Systems Theory and Organizational Economics (The section on “Population Ecology”has been deleted.) Deletions from the Fourth Edition Fremont E. Kast and James E. Rosenzweig, “General Systems Theory: Applications for Orga- nization and Management” (1972) Michael T. Hannan and John Freeman, “The Population Ecology of Organizations” (1977) Lex Donaldson, “The Ethereal Hand: Organizational Economics and Management Theory” (1990) New Additions Jay B. Barney and William G. Ouchi, “Learning from Organizational Economics” (1986) Paul H. Rubin, “Managing Business Transactions” (1990) Chapter VI. Power and Politics Organization Theory Deletion from the Fourth Edition Michael D. Cohen and James G. March, “Leadership in an Organized Anarchy” (1974) New Addition James G. March, “The Power of Power” (1966) Chapter VII. Organizational Culture And Sense Making Deletion from the Fourth Edition Gareth Morgan, “Images of Organization” (1986) New Addition Scott D. N. Cook and Dvora Yanow, “Culture and Organizational Learning” (1993) Substitution “Defining Organizational Culture,” from the second edition of Edgar H. Scheiris Organizational Culture and Leadership (1993), replaces the same chapter from the first edition. Chapter Vili. Organizational Culture Reform Movements Deletion from the Fourth Edition David Osborne and Ted Gaebler, “Reinventing Government: Introduction” (1992) New Addition A1 Gore, “Creating a Government that Works Better and Costs Less: Report of the National Performance Review” (1993) Chapter IX. Postmodernism and the Information Age Deletions from the Fourth Edition Shoshana Zubolf, “In the Age of the Smart Machine: The Limits of Hierarchy in an Informated Organization” (1988) Karl E. Weick, Jr., “Technology as Equivoque: Sensemaking in New Technologies” (1990) L. Douglas Kiel, “Nonlinear Dynamical Analysis: Assessing Systems Concepts in a Govern- ment Agency” (1993) New Additions Janet Fulk and Gerardine DeSanctis, “Articulation of Communication Technology and Orga­ nizational Form” (1999)