Examiners commentaries 2010

Examiners commentaries 2010

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 FOUR of 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 theory and 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.

127 Organisation theory: an interdisciplinary approach

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. Reading for this question Chapters 1 and 3 of the subject guide and linked references. Approaching the question 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 costs of 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? Reading for this question Chapter 4 of the subject guide and linked references. Approaching the question 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 a comparative 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. Reading for this question Chapter 5 of the subject guide and linked references. Approaching the question 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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Examiners commentaries 2010

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. Reading for this question Chapter 6 of the subject guide and linked references. Approaching the question 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 6 Why 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. Reading for this question Chapter 7 of the subject guide and linked references. Approaching the question 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 something an organisation has and more interpretive approaches that emphasise culture as something an organisation is.
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127 Organisation theory: an interdisciplinary approach

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 of why so 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 drawing on both economic and sociological theories of organisations. Reading for this question Chapter 8 of the subject guide and linked references. Approaching the question 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 of financial 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 8 What theories best explain how organisations evolve and change over time? Give reasons for your answer. Reading for this question Chapter 9 of the subject guide and linked references. Approaching the question 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 neoinstitutional theories of change in organisations, making reference to the work of DiMaggio and Power, and Meyer and Rowan in particular.
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Examiners commentaries 2010

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? Reading for this question Chapter 10 of the subject guide and linked references. Approaching the question 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. Reading for this question Chapter 11 of the subject guide and linked references. Approaching the question 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.

127 Organisation theory: an interdisciplinary approach

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. Reading for this question Chapter 12 of the subject guide and linked references. Approaching the question 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. Reading for this question Chapter 13 of the subject guide and linked references. Approaching the question 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).