Table Of ContentOrganizational Theory,
Design, and Change
seventh edition
global edition
Gareth R. Jones
Texas A&M University
Boston Columbus Indianapolis New York San Francisco Upper Saddle River
Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montréal Toronto
Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo
Editorial Director:Sally Yagan Senior Managing Editor:Judy Leale
Acquisitions Editor:Brian Mickelson Production Project Manager:Ilene Kahn
Senior International Acquisitions Editor: Senior Operations Supervisor:Arnold Vila
Laura Dent Operations Specialist:Cathleen Petersen
International Print and Media Editor:Leandra Paoli Creative Director:Blair Brown
Director of Editorial Services:Ashley Santora Sr.Art Director/Design Supervisor:Janet Slowik
Editorial Project Manager:Sarah Holle Art Director:Steve Frim
Director of Marketing:Maggie Moylan Interior Designer:Joseph DePinho
Senior Marketing Manager:Nikki Ayana Jones Cover Designer:Jodi Notowitz
International Marketing Manager:Dean Erasmus Cover Photo:© Nikada/istock
Marketing Assistant:Ian Gold Full-Service Project Management:Integra
Pearson Education Limited
Edinburgh Gate
Harlow
Essex CM20 2JE
England
and Associated Companies throughout the world
Visit us on the World Wide Web at:
www.pearson.com/uk
©Pearson Education Limited 2013
The right of Gareth R. Jones to be identified as author of this work has been asserted by him in accordance with the
Copyright, Designs and Patents Act 1988.
Authorised adaptation from the United States edition, entitled Organizational Theory, Design, and Change, 7thEdition,
ISBN: 978-0-13-272994-9 by Gareth R. Jones, published by Pearson Education, Inc., ©2013.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any
form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written
permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright
Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS.
All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not
vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks
imply any affiliation with or endorsement of this book by such owners.
Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear
on the appropriate page within text.
ISBN 13: 978-0-273-76560-8
ISBN 10: 0-273-76560-4
British Library Cataloguing-in-Publication Data
Acatalogue record for this book is available from the British Library
10 9 8 7 6 5 4 3 2 1
16 15 14 13 12
Typeset in Times Ten Roman 10/12 by Integra
Printed and bound by Courier Kendallville in The United States of America
The publisher’s policy is to use paper manufactured from sustainable forests.
For Nicholas and Julia
This page intentionally left blank
Brief Contents
Preface 17
Part 1 The Organization and Its Environment 23
Chapter 1 Organizations and Organizational Effectiveness 23
Chapter 2 Stakeholders, Managers, and Ethics 50
Chapter 3 Organizing in a Changing Global Environment 81
Part 2 Organizational Design 114
Chapter 4 Basic Challenges of Organizational Design 114
Chapter 5 Designing Organizational Structure: Authority
and Control 143
Chapter 6 Designing Organizational Structure: Specialization
and Coordination 170
Chapter 7 Creating and Managing Organizational Culture 201
Chapter 8 Organizational Design and Strategy in a Changing Global
Environment 229
Chapter 9 Organizational Design, Competences, and Technology 262
Part 3 Organizational Change 295
Chapter 10 Types and Forms of Organizational Change 295
Chapter 11 Organizational Transformations: Birth, Growth, Decline,
and Death 327
Chapter 12 Decision Making, Learning, Knowledge Management,
and Information Technology 356
Chapter 13 Innovation, Intrapreneurship, and Creativity 388
Chapter 14 Managing Conflict, Power, and Politics 413
Case Studies 439
Company Index 502
Name Index 505
Subject Index 507
5
This page intentionally left blank
Contents
Preface 17
Part 1 The Organization and Its Environment 23
Chapter 1 Organizations and Organizational Effectiveness 23
What Is an Organization? 23
How Does an Organization Create Value? 25
Why Do Organizations Exist? 27
To Increase Specialization and the Division of Labor 27
To Use Large-Scale Technology 28
To Manage the Organizational Environment 28
To Economize on Transaction Costs 28
To Exert Power and Control 29
Organizational Theory,Design,and Change 30
Organizational Structure 30
Organizational Culture 31
Organizational Design and Change 31
The Importance of Organizational Design and Change 33
Dealing with Contingencies 33
Gaining Competitive Advantage 34
Managing Diversity 36
The Consequences of Poor Organizational Design 36
How Do Managers Measure Organizational Effectiveness? 38
The External Resource Approach:Control 39
The Internal Systems Approach:Innovation 39
The Technical Approach:Efficiency 40
Measuring Effectiveness:Organizational Goals 41
The Plan of This Book 42
Organizational Design 44
Organizational Change 44
Summary 45 • Discussion Questions 45
Organizational Theory in Action:Practicing Organizational Theory 46
Open Systems Dynamics 46
The Ethical Dimension #1 46
Making the Connection #1 46
Analyzing the Organization: Design Module #1 46
Assignment 47
Chapter 2 Stakeholders, Managers, and Ethics 50
Organizational Stakeholders 50
Inside Stakeholders 50
Outside Stakeholders 52
Organizational Effectiveness:Satisfying Stakeholders’
Goals and Interests 56
Competing Goals 57
Allocating Rewards 58
7
8 CONTENTS
Top Managers and Organizational Authority 59
The Chief Executive Officer 61
The Top-Management Team 62
Other Managers 63
An Agency Theory Perspective 63
The Moral Hazard Problem 63
Solving the Agency Problem 64
Top Managers and Organizational Ethics 65
Ethics and the Law 66
Ethics and Organizational Stakeholders 67
Sources of Organizational Ethics 69
Why Do Ethical Rules Develop? 71
Why Does Unethical Behavior Occur? 73
Creating an Ethical Organization 74
Designing an Ethical Structure and Control System 75
Creating an Ethical Culture 75
Supporting the Interests of Stakeholder Groups 75
Summary 76 • Discussion Questions 77 • Organizational Theory
in Action:Practicing Organizational Theory 77
Creating a Code of Ethics 77
The Ethical Dimension #2 77
Making the Connection #2 77
Analyzing the Organization: Design Module #2 77
Assignment 77
Chapter 3 Organizing in a Changing Global Environment 81
What Is the Organizational Environment? 81
The Specific Environment 83
The General Environment 85
Sources of Uncertainty in the Organizational Environment 87
Resource Dependence Theory 91
Interorganizational Strategies for Managing Resource Dependencies 92
Strategies for Managing Symbiotic Resource Interdependencies 93
Developing a Good Reputation 93
Cooptation 94
Strategic Alliances 94
Joint Venture 97
Merger and Takeover 98
Strategies for Managing Competitive Resource Interdependencies 98
Collusion and Cartels 99
Third-Party Linkage Mechanisms 100
Strategic Alliances 100
Merger and Takeover 100
Transaction Cost Theory 101
Sources of Transaction Costs 102
Transaction Costs and Linkage Mechanisms 103
Bureaucratic Costs 104
Using Transaction Cost Theory to Choose an Interorganizational Strategy 104
Summary 108 • Discussion Questions 109 • Organizational Theory
in Action:Practicing Organizational Theory 109
Protecting Your Domain 109
The Ethical Dimension #3 109
Making the Connection #3 110
Analyzing the Organization: Design Module #3 110
Assignment 110
CONTENTS 9
Part 2 Organizational Design 114
Chapter 4 Basic Challenges of Organizational Design 114
Differentiation 114
Organizational Roles 116
Subunits:Functions and Divisions 117
Differentiation at the B.A.R.and Grille 118
Vertical and Horizontal Differentiation 119
Organizational Design Challenges 119
Balancing Differentiation and Integration 121
Integration and Integrating Mechanisms 121
Differentiation versus Integration 124
Balancing Centralization and Decentralization 125
Centralization versus Decentralization of Authority 125
Balancing Standardization and Mutual Adjustment 128
Formalization:Written Rules 128
Socialization:Understood Norms 129
Standardization versus Mutual Adjustment 130
Mechanistic and Organic Organizational Structures 131
Mechanistic Structures 132
Organic Structures 132
The Contingency Approach to Organizational Design 134
Lawrence and Lorsch on Differentiation,Integration,
and the Environment 134
Burns and Stalker on Organic versus Mechanistic Structures
and the Environment 137
Summary 138 • Discussion Questions 139 • Organizational Theory
in Action:Practicing Organizational Theory 139
Growing Pains 139
Making the Connection #4 139
The Ethical Dimension #4 139
Analyzing the Organization: Design Module #4 139
Assignment 140
Chapter 5 Designing Organizational Structure: Authority
and Control 143
Authority:How and Why Vertical Differentiation Occurs 143
The Emergence of the Hierarchy 143
Size and Height Limitations 144
Problems with Tall Hierarchies 146
The Parkinson’s Law Problem 149
The Ideal Number of Hierarchical Levels:The Minimum Chain of Command 149
Span of Control 150
Control:Factors Affecting the Shape of the Hierarchy 152
Horizontal Differentiation 152
Centralization 154
Standardization 155
The Principles of Bureaucracy 156
The Advantages of Bureaucracy 159
Management by Objectives 161
The Influence of the Informal Organization 162
IT,Empowerment,and Self-Managed Teams 163
Summary 165 • Discussion Questions 165 • Organizational Theory
in Action:Practicing Organizational Theory 166
How to Design a Hierarchy 166
The Ethical Dimension #5 166
