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Examiners commentaries 2010

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127 Organisation theory: an interdisciplinary approach Zone A

Important note

This commentary reflects the examination and assessment arrangements

for this unit in the academic year 200910. In 2011 the format of the

examination will change to:

Candidates should answer FOUR of the following TEN questions. All

questions carry equal marks.

The format and structure of the examination may change again in future

years, and any such changes will be publicised on the virtual learning

environment (VLE).

Specific comments on questions

Candidates should answer FOURof the following TWELVE questions. All

questions carry equal marks.

Question 1

Why do economists place so much emphasis on information when seeking to

understand different approaches to control and co-ordination in organisations?

Reading for this question

Chapter 2 of the subject guide and linked references.

Approaching the question

Effective answers to this question included a clear understanding of the

problem of control and coordination in organisations and the importance

of formal structures (including rules) for achieving coordination. Here

students focused on the use of hierarchy as a mode of coordination and

the relationships between hierarchies, spans of control, and access to

information.

There was a discussion of how economists understand the relationship

between information, control and coordination. Principalagent theoryand concepts such as adverse selection and moral hazard may be useful

to illustrate this point. Broader points were made about information,

contractual uncertainty, transaction costs and the different modes of

governance (hierarchies, networks, markets) that arise from this.

Very effective answers included a critical discussion of other factors (in

addition to information) that might shape control and coordination, such

as power and historical legacy. Some students drew here on alternative

sociological concepts of organisations.

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127 Organisation theory: an interdisciplinary approach

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Question 2

In what ways have the ideas of scientific management helped to increase the

capacity of managers to monitor and control performance in organisations? In

your answer draw on both economic and sociological theories of organisations.


Chapters 1 and 3 of the subject guide and linked references.


Effective answers to this question included a clear definition of scientific

management and the origins of the concept in the writings and work of

Taylor. There was a discussion of how scientific management can provide

a means of monitoring and control over the labour process. Reference was

made to task fragmentation, the separation of thinking from doing and

standardisation (rules) that allows for larger spans of control and lower

monitoring costs. The link with Fordism and mass production was also noted.

Very effective answers included a critical discussion of the limitations of

scientific management as a form of monitoring and control. Reference was

made here to the work of the human relations school on the hidden costsof scientific management, on sources of resistance and the risks associated

with de-skilling. There was also a discussion of economic theories relevant

to this topic, notably the principalagent theory and the links between this

and the challenge of monitoring and control.

Question 3

According to economists and psychologists which incentive and reward systems

are most likely to be effective?




Effective answers to this question included a definition of incentive and

reward systems, making a general distinction between intrinsic and

extrinsic rewards. There was a discussion of economic theories of reward, in

particular principalagent theory as well as an account of the relationship

between the effectiveness of reward systems, the design of contracts

and risk-bearing attitudes. These answers also included a discussion of

psychological theories of motivation noting the key difference in terms of

assumptions with economic approaches to rewards and motivation.

Very effective answers made extensive reference here both to content (Maslow,

Hertzberg) and process (equity and expectancy theories). They also included acomparative analysis of both approaches and the different conclusions drawn

about the relative effectiveness of incentive and reward systems.

Question 4

What are the benefits (if any) of team-working in organisations? Justify

your answer by drawing on ideas from either economic, psychology and/or

sociological approaches to organisations.




Effective answers to this question included some attempt to define teams,

differentiating between teams and groups and between different kinds of

teams (for example, production teams, cross-functional project teams).

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There was a discussion of economic theories of team production, the

problem of shirking. Good answers also made reference to game theory,

the notion of a prisoners dilemma in relation to teams and the work

of Alchian and Demsetz on the limitations of teams that lack strong

leadership. These answers also incorporated a discussion of sociological

and psychological theories of teams, in particular, the work of human

relations and sociotechnical systems theorists. Good answers noted

the more positive spin given to team production in these approaches

compared to economic perspectives.

Very effective answers included some attempt to critically evaluate the

costs and benefits of team production from sociological/psychological

and/or economic perspectives.

Question 5

How important is power as a concept for understanding behaviour of people in

organisations? In your answer draw on both economic and sociological theories

of organisations.




Effective answers to this question included a discussion of economic

theories of power noting the view of certain scholars (such as Alchian and

Demsetz) that power relationships in organisations are no different to

those in markets. Some reference was made to the notion of bargaining

power and the antecedents of bargaining power. Good answers made

reference to related models such as the behavioural theory of the firm.

They also included a discussion of sociological theories of power in

organisations, noting how power is often understood as a resource held by

certain actors and groups to promote their interests and leverage change.There was some description of the different sources of power (including

authority, knowledge, incentives ).

Very good answers made reference here to radical perspectives on power,

including Marxist models, Lukes three dimensions of power and the work

of Foucault (on power and the construction of subjects). There was also a

critical discussion of the relative importance given both in sociological and

economic perspectives to the role of power in organisations. It was noted

that this concept is given more weight by sociologists although economists

are not blind to the role of power.

Question 6Why do some organisations invest heavily to create and perpetuate strong

corporate cultures? You may answer this question with reference to economic

and/or sociological theories of organisations.




Effective answers to this question included a definition of the term strong

corporate culture noting the influence of Japanese management ideas and

the assumed link between strong cultures and improved performance.

These answers introduced the distinction between culture as somethingan organisation has and more interpretive approaches that emphasise

culture as something an organisation is.

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Good answers made reference to how game theorists explain the

formation and maintenance of cultures as a result of bilateral and

generalised reciprocity (to generate so-called helping cultures). There

was also a discussion of sociological approaches to culture, noting the

importance of norms, socialisation processes and broader national

conditions in shaping corporate culture.

Very good answers referred to possible links between corporate cultures

and the role of transformational leaders (for example, in the work of

Schein). These answers also included a critical discussion ofwhyso

much emphasis has been placed on developing strong corporate cultures.

Some candidates focused here on the link between culture and control

and, more generally, to enhanced performance. They also critically

reviewed these links, noting the relative lack of evidence to support links

with performance and how strong sub-cultures might represent forms of

resistance to control.

Question 7

Is there a relationship between employee involvement, partnership and

increased performance in organisations? Give reasons for your answer drawingon both economic and sociological theories of organisations.




Effective answers to this question included a discussion of the different

forms that employee involvement and partnership in organisations might

take. In some cases this included examples of worker democracy (voting)

and ownership. There was a discussion of relevant economic theories

that either question the effectiveness of worker democracy as a mode

of governance (Arrows impossibility theorem) or point to the role offinancial incentives (principalagent theory).

Good answers referred to sociological approaches that have demonstrated

links between worker participation, motivation and performance, for

example, human relations (Coch and French) and the Ohio School. The

more recent human resource management and performance literature

was also mentioned. Very effective answers made some attempt to

discuss what both of these types of theory tell us about the usefulness

of employee involvement and partnership as a mechanism for raising

performance.

Question 8What theories best explain how organisations evolve and change over time?

Give reasons for your answer.




Effective answers to this question included a discussion of evolutionary

theories noting the difference between Darwinian and Lamarkian

strands. There was also a discussion of how these approaches relate

directly to organisations, for example, in relation to population

ecology theory and evolutionary economics. Account was given of neo-institutional theories of change in organisations, making reference to the

work of DiMaggio and Power, and Meyer and Rowan in particular.

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Very effective answers made some attempt to systematically compare

these approaches to change and noting the difference between

evolutionary models that emphasise change and institutional models that

focus on inertia and conformity (isomorphism).

Question 9

Under what conditions are networks likely to be more effective modes of

governance than either markets or hierarchies?




Effective answers to this question included a description of the main

features of institutional and transaction cost economics. Reference needs

to be made to the works of Coase and Williamson and the theory of

market failure. Some understanding was also shown of how this theory

explains markets and hierarchies as a consequence of relative transaction

costs.

There was a discussion of the concepts of networks as an alternative

third way mode of governance between markets and hierarchies, perhaps

drawing on the work of Powell. Included here as well was some analysis

of the relative strengths of networks, for example, as a dynamic means of

organising supply chains (Toyota model).

Very effective answers included a critical discussion of the limitations

of networks and the risks associated with them, for example, around

sustainability, lock-in and over dependency.

Question 10

According to Chandler (1962) the structure of large firms will always follow

changes in strategy. Discuss.




Effective answers to this question included some discussion of the nature

of large multidivisional firms (the M form) and how they differ from

functionally organised firms. There was a discussion of management

theories that explain the rise of the M form, noting in particular Chandlers

assertion that structures follow strategy over time as a consequence of

changing informational demands placed on senior managers caused

by strategies of diversification. In addition to this was a discussion of

economic theories explaining the development of the M form structure,

for example, referring to the work of Williamson.

Exceptional answers explored other factors influencing the M form

structure, for example the role of national level financial institutions and

management consultants.

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Question 11

What are the implications of increased size for organisational structure? Give

reasons for your answer drawing on economic and sociological theories of

organisation.




Effective answers to this question included a discussion of what is meant

by organisational size, for example, in relation to turnover (and more

importantly) numbers of direct employees. There was a review of the

evidence linking size to the increased level of hierarchy and formalisation

in organisations. Some candidates drew specifically on contingency

theories of organisational structure including the Aston studies (the link

between organisational size and hierarchy) and the work of Woodward

on technology (how different production technologies determine spans

of control and therefore hierarchy). These answers also mentioned

economic explanations of the size-structure link, for example in relation to

information requirements and spans of control.

Very good answers included a critical discussion of the possible limitations

of these perspectives, for example drawing on John Childs notion of

strategic choice.

Question 12

Given the dominance of national institutions and incidence of path dependency,

organisational forms around the world are unlikely to converge in future.

Discuss.




Effective answers to this question included a full definition of the concept

of path dependency drawing on the comparative literature of forms of

capitalism or national business systems. There was also a discussion of

how business systems shape particular organisational forms.

Very effective answers included a critical discussion of the limitations

of the path dependency argument noting broader pressures towards

globalisation and convergence (for example, with the rise of so-called

transnational firms and the role of global consulting firms in disseminating

management ideas).

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