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Organizational behavior 7e by luthans chap003

Chapter Three

Context: Design and


© 2008 The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives
• Explain the organization theories of open systems,
information processing, contingency, ecology, and
• Present the modern horizontal, network, and virtual
designs of organizations.
• Define organizational culture and its characteristics.
• Relate how an organizational culture is created.
• Describe how an organizational culture is

• Explain some ways of changing organizational

• Organization structure represents the
skeletal framework for organizational
– Consists of very flexible networks.
– Recognizes the interaction of information
technology and people.

• Cultural context that the organization
provides for organizational behavior.

Organization Theory
• Historical roots - Chester Barnard.
– Cooperative system is contingent on the
human participants’
• Ability to communicate
• Willingness to serve
• Strive toward a common purpose

• Organization as an open system
– input → transformation process → output

Organization Theory

• Information processing view of
– External and internal uncertainties.
– Become a networked, information processing

• Contingent and ecological organization
– Learning organization represents the latest

thinking in organization theory and compatible
with the new paradigm environment.

Organization Theory

• A learning organization
– Single loop learning
– Double loop learning

• Organizational behavior in the learning
– Associated with employees’ reacting to
environmental changes and characterized by
human-oriented cultural values.

• Learning organizations in action.

Characteristics of Learning Organizations

Traditional versus Learning Organizations

Modern Organization Designs
• Horizontal organizations
– Relevant to today’s environmental needs for flexibility,
speed, and cooperation.

• Network designs
– Involves a unique combination of strategy, structure,
and management processes.

• Virtual organization
– Temporary network of companies that come together
quickly to exploit fast-changing opportunities.

Traditional Hierarchical versus the
Network Organization

The Contrast Between the Hierarchical
and Network Organization

Example of a Virtual Organization

Organizational Culture Context
• Definition and characteristics
– Recognize the importance of shared norms
and values that guide organizational
participants’ behavior.

• Uniformity of culture
– Organizational culture, a common perception
held by the organization’s members.
• Dominant culture
• Subculture

Creating and Maintaining a Culture
• How organizational cultures start
– Common steps include the formation of an
idea, a core group, action plan, and

• Maintaining cultures through steps of
– Selection of entry-level personnel
– Placement on the job
– Job mastery

Steps of Organizational Culture

Creating and Maintaining a Culture

• Maintaining cultures through steps of
socialization (continued)
– Measuring and rewarding performance
– Adherence to important values
– Reinforcing the stories and folklore
– Recognition and promotion

Creating and Maintaining a Culture

• Changing organizational culture
– Case of mergers and acquisitions
• Focus areas: structure, politics, and emotions.

– Case of emerging relationship enterprises
• Success dependent on trust, communication, and
negotiation skills.

– Guidelines for change
• Caution: pragmatically changing an organizational
culture affects almost every aspect of the


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