Definition: Organizational theory is the study of the behavior and nature of organizations and their environments (Miner 2005, p.4).
It includes a set of interrelated concepts showing how individuals or groups behave in an organization under different conditions.
Research shows the internal and external environmental impact of the social behavior of an individual or a unit in an organization.
Examples of Organizational Theory
- Classical or Traditional Theory
- Human Relations or Neo-Classical Theory
- Administrative Theory
- Scientific Management Theory
- Weber’s Ideal of Bureaucracy
- The Decision-Making Theory
- Modern Organizational Theory
#1. Classical or Traditional Theory
Here, an organization is considered a machine, and human beings are part of it. This theory emphasizes organization more than employees.
#2. Human Relations or Neo-Classical Theory
This is the extended version of the classical theory with the addition of behavioral science. An organization is assumed to be a social system, and human action affects its performance.
This theory shows an organization mixes formal and informal aspects of organization.
#3. Administrative Theory
A French scientist, Henri Fayol, proposed this theory.
He focused on top-down management approval to establish structure and divide labor for efficiency. Fayol proposed the creation of various departments where different activities could be performed to achieve organizational goals.
#4. Scientific Management Theory
This was one of the earliest theories that applied engineering knowledge to management. The theory focuses on individual labor efficiency and productivity. It analyzes and synthesizes workflows with the intention of improving the economic efficiency of employees.
Scientific management is also known as Taylorism, after its pioneer Frederick Winslow Taylor.
#5. Weber’s Ideal of Bureaucracy
The bureaucratic theory was popularized by the German sociologist Max Weber in 1905. He proposed running the organization with a rigid structure and a well-defined hierarchy governed by tough procedures and rules.
He wanted a robust bureaucratic structure operated by officials who follow the rules.
#6. The Decision-Making Theory
This theory was developed by Nobel Laureate Herbert A. Simon (for the same research in 1978).
He considered an organization to be a structure of decision-makers. Those made at the top level cascade to the lower level. Lower levels also make decisions, but the most important ones are at the top. This decision-making accepts the hierarchy of an organization.
#7. Modern Organizational Theory
This does not consider an organization as a closed system. The organization is an open system, and the surrounding environment impacts it. The environment can be internal or external.
Summary
Organization theory studies organizations, their environment, bureaucracy, and the impact of various factors on performance.
Fine concept and concise to the point.