IB module 1 "The concept of business in context"

importance of relationships, family(kinship), customs, traditions

pointed out the abusive abrasive enforcement of traditional authority
-> traditional authority = weakness for larger organizations 

criticize particularism:

hiring, or firing employees because of factors unrelated to organizations: (religion, race, sex, family connection, relation)

-> unlikely to have the most skilled workers 

proposed a more rational  legal perspective authority, *leadership and decision-making: beaurocratic management

1) wanted more formal rules (explicitly stated rules determining why, what and how to organize): high-level organizational rules: shape decision 

2) hierarchy = clear chain of command (pyramid structure with workers at the base and levels of supervisors, top : big boss)

3) authority of office/position: authority not linked with people or tradition but to explicitly formulated positions 

4) division of labor: assured that expertise is developed in specialized department -> helps authority to be spread and links it with experience

5) systematic pay structure: rational approach to career: based on merit rather than connection

6) separation between work and private life 

1) red tape: (most important received) rules for the sake of rules Kakka wrote on this

2) inflexibility: makes organisations inflexible →when the context changes, changing rules proves difficult for bureaucratic organizations

3) restrict explicit particularism, but give room for covered particularism (Weber already worried about this) 

observed the workers: patterns of high labor cost because of low labor efficiency

industrialization: increasing scale of production, growing complexity, rising need for smarter management → “scientific management”

became the first management consultant

Taylor’s beliefs were grounded in the principle of homo economicus (worker is a rationally calculating machine, narrowly self-interested, desires to possess wealth and motivated by money)

→ thought that piece wages would boost efficiency

1) efficiency first:

• standardization of tasks (division of labour)

• specialization of tasks (also of managers)

• piece wage

• clear management hierarchy

2) separation of thinking and doing: planning and procedures implemented by hierarchy that discipline workers

3) science: scientific analysis of work, scientific selection of workers → smart work not only harder work

time and motion studies to :

• find how much each little task took

• find the fewest number of motions required for each task

  • 1) divide work into simple elementary movements

    2) sudy how several skilled worken make each movement

    3) pick out all useless movements and dicard them

    4) use stopwatch to select the quickest and best method

    5) describe record the proper time and motions

1) Taylor: workers in a steel company → raised wage for best workers → rise in productivity

2) Henry Ford: developed the assembly line

gain of time, efficiency, goods and services more affordable

poor consideration of workers, controlling individual’s behavior

organizations = social systems

Elton Mayo: wanted to build on Taylor’s work and find other factors that could increase efficiency and productivity

mid-20s: breakthrough: observed textile company : scientific management but experienced a high rate of employees turnover → believed it was because of repetitive work → solution:: giving breaks → employee could be motivated by more than just money

highlighted importance of Human relations (social groups, informal relations, team spirits)

worker's attitude and morale can counteract the negative effects of fatigue, monotony, boredom

Elton Mayo: “The point of view was to regard the business organizations as a social system”

Limitations:

• effects could be a result of the experiment itself (not showing natural work behavior)

previous theories: bureaucratic management, scientific management and human relation viewed the organisation as a closed system organized without influence on outside forces.

second world war proved that organizations are influenced by outside forces

business thinking: Katz and Khan: open system model → organization more complex than we thought → we can understand businesses better if we think of them as living biological organisms

Through feedback loops the system adapts in order to grow and survive in the environment

• Permeability: Systems are open

(1) Information and resources flow in and out through the boundaries of the organization.

(2) Organisations must be open to the environment in order to survive.

• Holism: The organization needs to be viewed as a whole beyond the separate parts

(1) The organization is more than the sum of its parts

(2) The units of the organizations are interdependent, and interact through mutual feedback.

• Entropy: if you do not take good care of it a system tends to run down

equilibrium: maintaining the balance in order for the system to not deteriorate (disorganization).

• Equifinality: More than one best way, there are many ways to organise (not all as good as others).

view Contingency theory woodward

Joan Woodward:

contingency theory: 

• most dominant form of system theory 

• focuses on how the organization fits the environment 

in her research: 

• bureaucratic approach works best for routine tasks

• organic approach works better for non-routine tasks

Granovetter and Burt: look at organizations like networks rather than pyramids → emphasize horizontal rather than vertical relations 

• weak ties -> more jobs opportunity -> bridges to different and more unic infomation

• strong ties -> share the same kind of information

Vulnerabilities of (global) networks: World economy and intense connectivity through global networks has made the network vulnerable. → ex: coronavirus

- The pendulum swings

- All models of business thinking remain alive & kicking

- Context influences business thinking & business thinking influences context

- Extreme shocks, events, trends, trigger new business thinking.

the activities

Entropy refers to the notion that a system tends to “deteriorate”, run down, move toward “dis” organization.

• A sharp separation of work-life and private life.

money

Worker output went up with brighter as well as dimmer lights.

• Cultural and institutional frameworks

• That a bureacratic approach fits routine tasks and an organic approach fits well with non-routine tasks.

• The internal and external network of firms.

systems theory

Environmental, organisational and strategic contexts of business.

hat organisations are made up of interdependent parts, which can only be understood by reference to the whole.

Traditional authority

As machines

Hawthorne studies.

Systems theory

Organisations are like living organisms.

Weak ties

Business thinking swings back and forth between viewing firms more as closed systems or more as open systems

true