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Organizations in Action: Social Science Bases of Administrative Theory (Classics in Organization and Management Series)

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1967 saw the publication of three books that are now considered founding blocks of contingency approaches in organizational studies and human resource management. Theory of Leadership Effectiveness by Fred Fiedler, Organization and Environment: Managing Differentiation and Integration by Paul Lawrence and Jay Lorsch, and "Organizations in Action" by James D. Thompson. Fiedler created a model of leadership for industrial and organizational psychology while Lawrence, Lorsch, and Thompson studied organizational structure.

Thompson's book aims at providing what he calls a "conceptual inventory": a framework for tying together a multitude of concepts by various authors. The book reads like a serialized decision tree - a hundred propositions presented in the order of their dependencies, fleshed out by explanations and some examples of the concepts involved.

Thompson's approach is based on two fundamental ideas: 1) The nature of uncertainty in the environment is a determining factor of organizational structure. 2) Simple models cannot work for complex organizations, but for their respective components.

Uncertainty in the environment - variables the organization can neither control nor predict - is a key to understanding organizational structure, according to Thompson. An organization is built around a technical core; in order to achieve high performance, the organization shields the core from uncertainty by setting up separate components that serve as an interface to the outside world. Such a division of responsibility allows an organization to structure their technical core from a closed-system perspective and hence with a rational model. Uncertainty is taken care of, and the technical core component can be designed for maximum performance. The components at the managerial level are also tasked with controlling the technical core. Components at the third, the institutional level cover aspects of the environment that go beyond a straight-forward provision of resources and sales channels - here, uncertainty is high and means of control are few and weak.

In part two of the book, Thompson takes a stab at the human factor. He sketches out some goals of employees: individuals in early-ceiling occupations, for instance, use collective bargaining to improve the standing of their occupation while individuals in late-ceiling occupations try to improve their standing among their peers. Exercising discretion appears as a key problem to Thompson; while acknowledging that "some individuals are more tolerant of risk and ambiguity than others", he goes on with the assumption "that individuals exercise discretion whenever they believe it is to their advantage to do so and seek to evade discretion on other occasions." Individuals make entirely rational choices to present their work in the best light possible (pp. 123, 124), but they are not opportunistic; Thompson briefly discusses what he terms "deviant discretion" and presents it as a relatively minor problem, at least "in societies which possess the appropriate supporting institutions" (p. 122).

In this second part, Thompson appears to be out of his depth. He is not a psychologist - the concepts and models of part two look crude compared to the framework in part one. And while mechanistic models of organizations are commonplace, the reader may be less forgiving when simple models are applied to humans.

It is safe to assume that Frederick W. Taylor was aware that resources don't simply materialize in the factory as needed. Max Weber presented bureaucracy as an answer to an environment where rational-legal authority was on the rise. And both intended to tailor organizations to given problems, guided by their respective principles. From this perspective, Thompson does not stray far from the idea that there should be "one best way" - he offers a formalized, fairly deterministic way for finding the structure that can cope with a given environment, including its uncertainties. In fact, Thompson performs a sleight of hand in plain view of the reader: the highest uncertainty is relegated to a barely defined institutional level - but for that level, precious little insight is offered beyond the common measuring of success in satisficing terms.

What really differentiates Thompson from Weber and Taylor with regards to uncertainty is the assessment of organizations: goals may be unclear or conflicting, and cause/effect relations may be unknown - these are hard problems that bureaucracies and scientific management are ill-equipped to deal with.

Books are not very flexible as a medium. The process of creating and distributing new editions is expensive, and the readership may not even be appreciative, particularly if a book is popular enough to warrant further editions or even regarded as a "classic" (reference books are an obvious exception). And so this reader stumbled over several oddities and omissions: Thompson didn't foresee the rise of Just-In-Time production (pp. 20-23). Within his model, increasing interdependence results in increased power and dependence - an explanation of how this constitutes an "important escape from the 'zero-sum' concept of power" seems lacking (pp. 30-32). And he fails to mention that in many scenarios, coalescence is less constraining than co-optation - joint ventures are separate entities while members of the board of directors affect the main organization (pp. 35, 36). It is worth pointing out that this last problem becomes only obvious when looking at the specific examples given by Thompson.

Thompson's legacy is a more differentiated look at the complexity of organizational structure. If theories evolved, it might have been a decent starting point for a more comprehensive framework of organizational studies. In some disciplines, however, theories tend to be more closely associated with authors than with research subjects. They rarely evolve. They are superseded.

This 1967 book is a clasic in organisational theory. The current key target audience is PhD students in management/OB in business schools, or ditto academics that didn't come across the book during their studies. All others should stay away :)