Chapter 10: Sources of Structural Complexity: The Peripheral Components

Organizations are comprised of different units that respond to different forces (Scott p. 257).

Size and Structure
In examining organizations, size is an important property. Though it can be measured in various ways, the most common size measurement is the number of participants in the organization. Various researchers have shown that the percentage of technical and clerical staff and the extent of departmentalization increases with organizational size.

Though larger organizational size is associated with more formalism, it appears to be negatively correlated with centralized decision-making. Potentially centralization and formalization are alternative control mechanisms in large organization. The Aston group found that size was correlated to activity structuring but not authority concentration or work flow control.

But Kimberly (1976) notes that not only is size difficult to measure it's tenuous to assume that it's a causal variable to structure as well. Many of the early studies were cross- sectional instead of longitudinal (one longitudinal study did not find a negative correlation between the % administrative component and size). The relationship may also depend on whether the organization is in growth or decline.

Other factors have important effects on organizational structure. One study found that higher worker competency resulted in less bureaucratic structure.

Environment and Structure

As the enviroment and transactions become more complex, organizations adapt by becoming more complex themselves (Scott p. 268). Often new occupational groups are created to deal with this complexity (engineers, purchasing agents, patent lawyers, etc.). It occurs with changes to either the institutional environments (Dimaggio and Powell, 1983) or with technical environments.

Lawrence and Lorsch (1967) note that organizations must balance differentiation and coordination to successfully adapt to the rising environmental complexity. Depending on your theoretical perspective, these balancing conflicts are either seen as inefficiencies (rational system) or necessary parts of the negotiation process (natural system).

But Weick (1976) notes that more loosely-coupled organizations offer advantages in complex environments. And not all formal structures imply tight coupling either. Often loose-coupling is used to ceremonialize activities to improve organizational legitimacy without affecting the core technology (Meyer and Rowan, 1977).

Historical Development of Organizational Structure
As the world has become more complex, organizations have become more complex. Chandler (1962,1977) describes the gradual shift in American industry from entrepreneur-based control structures to the emergence of professional managers and the rise of the multi-divisional organization. Recently, however, this trend has slowed as companies realize the value of alliances and joint ventures instead of mergers and acquisitions.

Managing Up and Down
In modern organizations managers spend as much time managing up into the environment as down into the technical cores (Scott p. 280). Marxist theories point out that this environmental management is part of the interdependency between organizations and the larger political system. "Economic enterprises always rest on a political base" (Scott p. 281).

Meyer (1983) suggests that as society itself becomes more rational (with more regulations, incorporation of multiple rational perspectives, etc.), the individual organization becomes less rational as it tries to satisfy the myriad of demands by the institutionalized environment. Meyer says (p. 262) that modern organizations "look less like rational organizations than holding companies incorporating various institutionally defined packages".