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Book Review
Organization Theory: From Chester Barnard to the Present and Beyond
Xiang
This book is a collection of eight essays that were originally given as lectures at a seminar
held at the University of California, Berkeley in 1988 for celebrating the fiftieth anniversary
of the publication of Chester Barnard's The Functions of the Executive. Chester I. Barnard was
one of the premier management theorists of this century. His intellectual capacities were
widely recognized by political scientists, philosophers, economists, behavioral scientists,
journalists, politicians, and so on. His classical book The Functions of the Executive has an
enduring influence on studies on the field of organizations, as well as on related disciplines.
The authors of these eight essays include specialists in organization, anthropology, political
science, and economics. Each essay is of high quality, stating both remarkable thoughts and
creative opinions.
The first essay of the collection, “Chester I. Barnard and the Intelligence of Learning,” was
written by Barbara Levitt and James G. March. Through tracing the processes of
organizational learning, they analyze how organizations learn from experience and explain the
experiential learning leaves certain influence on the intelligence of organizations. As they
point out, this essay “accepts the idea that rational processes are not perfect”, “but it
emphasizes the other side of the Barnard approach to alternative intelligences, seeking to
understand their strengths and weaknesses” (p.15). In modern transnational corporations, for
example, decision makers usually choose irrational actions for some areas to support their
global strategies and achieve positive effects. This intelligence results from continuous
adjustments of profit balance in the process of experiential learning.
In the second essay, “Symbols and Organizations: From Barnard to the Institutionalists”, W.
Richard Scott emphasizes the importance of the institutional environments for the operation
of organizations. Who play important symbolic functions in organizations? In many
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traditional industries, such as petroleum and automobile industries, leaders / the executives
are typically acting as symbolic roles. They are responsible for guiding, directing, and
enhancing the morale of the employees through displaying their leadership abilities. While in
modern developing industries, especially in professional services industries such as
accounting firms, law firms and banks, institutional environments become more and more
important in managerial and operational aspects of organizations. “Institutional categories
and rules are also promulgated in the form of industry ‘standards’ and specifications that
attempt to impose some uniformity in size, dimensions of components, and parts” (p.50).
These standards not only provide organizations guidance in establishing and operating based
on institutional patterns, but also contribute healthy survival and competition environments
for them.
Glenn R. Carroll, in his essay “On the Organizational Ecology of Chester I. Barnard”,
explains the concept of “organizational ecology” and ecological analysis’ validity for the
strategy studies. Like the survival of the fittest in biology, the environmental selection theory
also applies in the organizational ecology. By considerate research, Carroll finds that, unlike
the ordinary belief that Barnard’s work is disconnected with the organizational ecology,
“Barnard also shows a keen sensitivity to the broader underlying social and political
environmental conditions necessary to sustain formal organization”, even “in the Introduction
to Functions of the Executive, Barnard qualifies his entire effort by taking into accounting
environmental forces” (p.59). From the viewpoint of strategy makers, external environmental
factors might be more essential for affecting the survival of organization. We still remember
that during the Asian finance crisis, many well-organized corporations encounter vital
difficulties, which mainly result from the sudden destruction of the whole economic
environment. In my opinion, the development of organization theory needs to do further
researches combined with organizational ecology.
The fourth essay is “Incentives in Organizations: The Importance of Social Relations”, by
Jeffrey Pfeffer. He concerns the importance of incentives in organizations. In organizational
incentive system, both monetary and non-monetary rewards play important roles to impel
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employees to pursue outstanding performance. To let readers to understand the meaning and
effects of incentives on behavior in a wider range of “social relations”, Pfeffer uses
psychological methods to do his own researches on the causes and consequences of wage
dispersion in organizations. Here I would like to apply some views in Shyam Sunder’s Theory
of Accounting and Control to understand the roles of incentives. In the introductory chapter,
Sunder points out, “conflict and cooperation coexist in economic exchanges” (p.5). Through
measuring by the accounting and control system, some employees in organizations are
rewarded based on their superior performance, thus forms conflict / competition and inspires
other employees with desire to obtain rewards. While “organizations are variously seen as
complex networks of human relationships…” (p.3), just because of different cooperation and
coordination, i.e. Sunder’s contracts, can organizations be formed and achieve their
development goals. Individuals in organizations also benefit from such incentive mechanism,
which is combined conflict with cooperation.
Mary Douglas provides us with the fifth essay “Converging on Autonomy: Anthropology and
Institutional Economics”. Examined the topic of individual autonomy from the angle of
cultural theory, Douglas observes that, “Barnard confronted four problems in his attempt to
link the relational choices of individuals to the survival of organizations” (p.100) in his
methodological individualism. Although Oliver E. Williamson’s research helps to remedy
three weaknesses, both he and Barnard cannot explain the precise relation between the
objectives of an organization and those of its individual members because “methodological
individualism starts with an ultimate unanalyzable factor” (p.100). Douglas develops her
powerful critical opinions on the methodological individualism of Barnard and Williamson,
and suggests how to overcome the fourth problem by a necessary cultural theory.
In the sixth essay, “The politics of Structural Choice: Toward a Theory of Public
Bureaucracy”, political scientist Terry Moe speaks of development situations of public
administration which different from those of organization theory. He suggests that the “new
economics of organizations” can be extended from private organizations to public
bureaucracies, and applies rational individual choice models to problems in public
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bureaucracy theory. This essay also shows author’s original view on a political theory of
public bureaucracy, which does not simply apply the new economics to politics. Although the
essay has less connection between it and Barnard’s The Function of Executive, Moe provides
a meaningful paper, which has a strong appeal to those who are interested in political science
and organization theories.
The seventh essay is by Oliver Hart, “An Economist's Perspective on the Theory of the Firm”.
From the standpoint of an economist, Hart introduces and analyzes several theories about
firms at that time. Beginning with the neoclassical theory, he addresses remarks on the
strengths and weaknesses of each theory. In the approach of viewing “the firm as a set of
property rights” (p.160), he even elaborates a complex example to help understand this
approach.
The editor, Oliver E. Williamson wrote the eighth essay “Chester Barnard and the Incipient
Science of Organization”. Williamson summarily presents the research works in organization
theory by Chester Barnard, Herbert Simon, and others. He also examines the concepts of his
own transaction cost economics. Based on the “science of administration” of Barnard and
Simon, Williamson’s “transaction cost economics aspires to move beyond administration to
deal symmetrically with all forms of organization” (p.187). He therefore does thorough
comparison between his concepts and those of other organization theorists.
As a whole, this collection provides us a valuable enlightenment to understand the late 80’s
progresses in organization theory and other disciplines based on Barnard’s original work. It
not only raises some interesting problems involving these studies, but also leaves readers,
especially those who are studying in related fields, inexhaustible thinking and motivation to
pursue more significant achievements.
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