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Thompson, James A.

1967
Organizations in Action

Organizational Analysis (Sociology 224)


February 23, 2010

Copyright © President & Fellows of Harvard College.


Key Points – From Preface
Uncertainties pose major challenges to rationality, and
Thompson argues that technologies and environments
are the basic sources of uncertainty for organizations.
How these facts of organizational life lead organizations
to design and structure themselves is explored.

Those organizations with similar technological and


environmental problems should exhibit similar behavior;
patterns should appear...we should also find that
patterned variations in problems posed by technologies
and environments result in systematic differences in
organizational action
Chapter 1
Strategies for Studying Organizations
Rational and natural systems (Gouldner, 1959)
• Rational results from closed-system strategy and natural-system model flows from an open-system strategy.
Closed System Strategy
• Structures of organization designed to gain highest efficiency
• e.g. Taylor’s Scientific Management, Gulick and Urwick’s Administrative Management or Weber’s Bureaucracy
• This literature focuses on planning or controlling
Open Systems Strategy
• Organizations as a set of interdependent parts which together make up a whole. This whole is also
interdependent with the environment.
• Examples of this type of research are studies of informal organizations, or studies of organizations and their
interface with the environment
Choice or compromise
• While efficiency is the goal in the closed systems perspective, survival is the goal in the open systems
perspective.
• Thompson claims that responsibility for future performance leads to a preference for closed systems view
Most research falls in one of those two categories, but bounded rationality evades the closed v. open systems
dilemma – but the Simon-March-Cyert work has not eliminated the dichotomy
Responsibilities and control are layered in qualitatively different roles in an organization (drawing on Parsons):
technical, managerial, and institutional.
The technical systems (where inputs are transformed into outputs) operate on closed-system logic of rational
efficiency and are buffered form environmental uncertainty.
Chapter 3
Domains of Organized Action
External responses to environmental uncertainty (resource dependence)
Complex organizations are unable to produce everything (i.e. vertically integrate) on which they depend for
their products. So, organizations define a domain, i.e. an arena in which they will be subject to
environmental dependencies. The domain needs to be legitimate to be sustainable. If the organization
faces too many constraints in a domain, it will try to move out of it. The organization's dependence on
some element of the task environment depends on two factors: criticality, substitutability
Building on Emerson (Power and Dependence): an organization is dependent on an element of its task
environment in proportion to the organizations need for resources for which that element can provide
Dependence is the obverse of power
This perspective is useful because it operationalizes power and lets the organization be measured
Power-Dependence provides an escape from the “zero-sum” concept of power
Competitive Strategy:
Firms use the following strategies:
• Minimize power of task-environment elements over them by maintaining alternative sources,
• Seek prestige, as this is the cheapest way of acquiring power
• Seek power over those on which they are dependent
Acquisition of Power:
• Cooperation – Power gained by exchanging commitments, the reduction of potential uncertainty for both
parties
• Contracting - negotiation of an agreement for the exchange of performances in the future
• Coopting - (Selznick 1949) process of absorbing new elements into the leadership or policy determining
structure of an organization.
• Coalescing – combination or joint venture with another organization
Chapter 4
Organization Design
Internal responses to environmental uncertainty
Organizations seek to reduce contingencies (=uncertainties) by organization design largely by
shifting boundaries.
3 components of organizational domain: technology included, population served and services
rendered. Changes in design involve modifications of the mix of these three elements
Organizations employing long linked seek to expand their domains by vertical integration –
combination of successive stages of production (e.g. oil)
Organizations employing mediating technologies seek to expand their domains by increasing the
populations served (e.g. railroad, telephone)
Organizations employing intensive technologies seek to expand their domains by incorporating the
object worked on (e.g. hospitals, universities)
Balancing of Components
Multi component organizations will seek to grow until the least reducible component is fully
occupied
Organizations with capacity in excess of what the task environment supports will seek to enlarge
their domains (esp industrial concerns – diversification as a response to excess capacity, e.g. oil
refining companies expanding into heating oil)
Limits to expansion include government constraint
Chapter 5
Technology and Structure
Structure occurs in an organization when the major components are further segmented or departmentalized,
and connections are established within and between departments. It is a socio-technical system containing
both human and non human resources or facilities.
Internal interdependence :To say that an organization is composed of interdependent parts is not to say that
each part is dependent on and supports every other part in any direct way. Yet they may be interdependent
in the sense that unless each performs adequately, the total organization is jeopardized.
Types of interdependence:
• Pooled interdependence: each part renders a discrete contribution to the whole and each is supported by
the whole.
• Sequential interdependence. X must act properly before Y can act.
• Reciprocal interdependence: outputs of each become inputs for the others. Each unit poses contingency
for the other.
All organizations have pooled interdependence, more complicated organizations have sequential as well as
pooled, and the most complex have reciprocal, sequential, and pooled. Each type of interdependence
contains increasing degrees of contingency.
Coordination: In a situation of interdependence, concerted action comes about through coordination.
Ways to achieve coordination:
• Standardization (pooled): establishment of routines/rules that constrain action of each unit into paths
consistent with those taken by others in the interdependent relationship.
• Coordination by plan (sequential): establishment of schedules for the interdependent units by which their
actions may then be governed. More appropriate than standardization for dynamic situations.
• Coordination by mutual adjustment (reciprocal): transmission of new info during the process of action.
Coordination by feedback.
Some Examples

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