Week 3 : Organizing through Hierarchies, Markets, Clans, Networks,etc

1. Week 3 : Organizing through Hierarchies, Markets, Clans, Networks,etc Bureaucracy • Weberian model • Tensions • Studies – Gouldner, Blau, Jackall, Ritzer Markets and Networks as Alternative/ Complementary Forms of Organizing • Market v. Hierarchy (Bureaucracy) v. Network • Social embeddedness of economic action

2. The Weberian Ideal-Type Model of Rational-Legal Authority (Bureaucracy) • Hierarchy based upon specialization and expertise (merit) (Inequality) • Clearly defined and fixed areas of responsibility • Impersonality without hatred or passion • Universality – separation of organizational from personal • Career (Identity) From a purely technical point of view, bureaucracy is capable of attaining highest degree of efficiency (Weber) (Power)

3. Tensions in Bureaucracy • Formal rule following or obedience to authority (procedural compliance/ ritualism) v. efficient pursuit of goals (pragmatic operations) • Issue of morale, cooperation and trust (Power) • Punishment-centred (imposition) v. representative (negotiation) bureaucracy. Work to rule issue • Primary tension – conflicts of ownership and associated interests • Wider commitments prevent and constrain organizational rationality • Secondary tension – resistance to supervisors practices introduced to address primary tension. Can be `functional’ in obscuring primary tensions `the degree of bureaucratisation is a function of human striving; it is the outcome of a contest between those who want it and those who do not’ (Gouldner)

4. Unintended Consequences of `Pragmatic Operations’ Blau study of state unemployment agency • Receptionists uncomfortable with delaying appointments with interviewers • face-to-face interaction • inconsistent with ascribed purpose of agency and detrimental to client self-esteem (Identity) • Interviewers overloaded with clients and performance based on number of placements (Insecurity), so • Job information hoarded, low cooperation with other interviewers, records falsified, clients placed in inappropriate positions

5. Bureaucracies as Moral Mazes • Jackall study of influence of forces of bureaucracy ‘Bureaucratic work causes people to bracket, while at work, the moralities that they might hold outside the workplace or that they might adhere to privately’ • Personal loyalty is primary rule of behaviour for managers • Circles of affiliation (Insecurity, Identity) • Cultivation of proper modes of appearing as the means of personal advancement (Insecurity, Identity) `humans create the tensions, conflicts and dynamism in bureaucratic structures and, through the exercise of their capacities, reshape the internal structures of organization’ (Jaffe)

6. McDonaldization of Society Ritzer’s commentary on contemporary forms of organizing • Efficiency – fast way of `filling up’ • Calculation – precise measurement and timing of all `cooking’ and serving operations • Predictability – standardization of everything • Control – elimination of uncertainty • Polarized reactions by employees and consumers to McDonaldization – fanaticism, alienation, disaffection • How to prevent anomie, construed as a lack of commitment/loyalty while reaping the benefits of the rationalization that exacerbates anomie

7. Markets, Hierarchies, Networks (Powell)

8. Networks • Markets - undersocialized of human behaviour (individualism; self-interest; rabble); Hierarchies oversocialized conception (control and program all activity) (Granovetter) • Networks • Embedded in social relationships (temporary or enduring) involving trust and obligations • Entrepreneurialism through network building and participation • Include numerous forms of collaboration and cooperation between organizations that defy market-hierarchy duality. Learning and mutual adjustment e.g. IBM and Toshiba collaboration

9. Emergent Patterns of Economic Activity • Globalization • - vertical disintegration through outsourcing of manufacture (but not design and marketing) to dispersed plants • - spatial concentration but vertical disintegration through milieus of innovation (Silicon Valley) • `real options’ – just-in-case mentality exploits anticipated highly profitable opportunities • High risk construction of 3 power plants to capitalise on spikes in energy prices (e.g. $7,000 from $40 megawatt hour of electricity)

10. Summary / Take-Away • Ideal-type bureaucracy as benchmark of modern organization • recurrent tensions and contradictions • pervasive presence - McDonaldization • Alternative (Market and Network) forms • Market – low transaction costs, flexible but risky as little control • Network – higher transaction costs, limited control, potentially inflexible and `lock in’ problems • Continuing reliance upon bureaucracy for market regulation and network integration and reproduction