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Industrial & Organisational : Introduction : Personnel : Organizational psychology : Occupations: Work environment: Index : Outline

An organization or organisation (read more about -ize vs -ise) is a formal group of people with one or more shared goals. The word itself is derived from the Greek word ὄργανον meaning tool. The term is used in both daily and scientific English in multiple ways.

In the social sciences, organizations are studied by researchers from several disciplines. Most commonly in sociology, economics, political science, psychology, and management. The broad area is commonly referred to as organizational studies, organizational behaviour or organization analysis. Therefore, a number of different theories and perspectives exist , some of which are compatible, and others that are competing.

Types of organization of relevence to psychologists

Psychologists are involved in or have studied a wide range of orrganizations, including:

Organization terms

  • Organisation – process-related: an entity is being (re-)organized (organization as task or action).
  • Organization – functional: organization as a function of how entities like businesses or state authorities are used (organization as a permanent structure).
  • Organization – institutional: an entity is an organization (organization as an actual purposeful structure within a social context)

Organization in sociology

In sociology "organization" is understood as planned, coordinated and purposeful action of human beings in order to construct or compile a common tangible or intangible product or service. This action is usually framed by formal membership and form (institutional rules). Sociology distinguishes the term organization into planned formal and unplanned informal (i.e. spontaneously formed) organizations. Sociology analyses organizations in the first line from an institutional perspective. In this sense, organization is a permanent arrangement of elements. These elements and their actions are determined by rules so that a certain task can be fulfilled through a system of coordinated division of labour.

An organization is defined by the elements that are part of it (who belongs to the organization and who does not?), its communication (which elements communicate and how do they communicate?), its autonomy (Max Weber termed autonomy in this context: Autokephalie)(which changes are executed autonomously by the organization or its elements?) and its rules of action compared to outside events (what causes an organization to act as a collective actor?).

By coordinated and planned cooperation of the elements, the organization is able to solve tasks that lie beyond the abilities of the single elements. The price paid by the elements is the limitation of the degrees of freedom of the elements. Advantages of organizations are enhancement (more of the same), addition (combination of different features), and extension. Disadvantages can be inertness (through co-ordination) and loss of interaction.

Organization in management and organizational studies

Main article: Organizational studies

Management is interested in organization mainly from an instrumental point of view. For a company organization is a means to an end in order to achieve its goals.

In this sense organizations can be distinguished into two fundamentally different sets of objectives:

  • Organizations whose goal is to generate certain services and/or to produce goods (factories, service enterprises, etc.) or to bring about certain effects in its surrounding world (e.g. authorities, police, political parties, interest groups, trade unions, etc.).
  • Organizations whose goal is to change individuals (e.g. schools, universities, hospitals, prisons). This type of organization is also known as a non-profit-organization.

With regard to the inner structure of organizations two terms have to be distinguished:

  • Structural organization: the hierarchical structure of the company (who is performing which task and who has which decision-making power?)
  • Process organization: the processes and routines of the manufacturing phases that take place within the company (in which order is something done and how?)

Organizational studies also includes research efforts to inform the effective management of organizations, and addresses organizational culture, organizational learning and managing change as major factors affecting organizational effectiveness, beyond the basics of organizational structure.

The IT revolution at the of the 1990s also had an effect on organizational theory. Through the partial removal of barriers such as distance and information costs that defined the structure of organization virtual organizations have become reality. For example it became more difficult to say who belongs to an organization and who not. New business models came into existence that have been at the centre of organizational research.

Organization theories

Among the theories that are or have been most influential are:

  • Weberian organization theory (refer to Max Weber's chapter on Bureaucracy in his book 'Economy and Society')
  • Marxist organization analysis
  • Scientific Management (mainly following Frederick W Taylor)
  • Human Relations Studies (going back to the Hawthorne studies, Maslow and Hertzberg)
  • Administrative theories (with work by e.g. Henri Fayol and Chester Barnard)
  • Contingency theory
  • New institutionalism and new institutional economics
  • Network analysis
  • Economic Sociology
  • Organization ecology (or demography of organizations)
  • Transaction cost economics
  • Agency theory (sometimes called principal - agent theory)
  • Studies of organization culture
  • Postmodern organization studies
  • Labour Process Theory
  • Critical Management Studies
  • Unicist Natural Organization
  • Transaction cost theory
  • Garbage can model

Organizational structures

Main article: Organizational structure

The study of organizations includes a focus on optimizing organizational structure. According to management science, most human organizations fall roughly into four types:

Pyramids or hierarchies

A hierarchy exemplifies an arrangement with a leader who leads leaders. This arrangement is often associated with bureaucracy. Hierarchies were satirized in The Peter Principle (1969), a book that introduced the term hierarchiology and the saying that "in a hierarchy every employee tends to rise to his level of incompetence".

An extremely rigid, in terms of responsibilities, type of organization is exemplified by Führerprinzip.

Committees or juries

These consist of a group of peers who decide as a group, perhaps by voting. The difference between a jury and a committee is that the members of the committee are usually assigned to perform or lead further actions after the group comes to a decision, whereas members of a jury come to a decision. In common law countries legal juries render decisions of guilt, liability and quantify damages; juries are also used in athletic contests, book awards and similar activities. Sometimes a selection committee functions like a jury. In the middle ages juries in continental Europe were used to determine the law according to consensus amongst local notables.

Committees are often the most reliable way to make decisions. Condorcet's jury theorem proved that if the average member votes better than a roll of dice, then adding more members increases the number of majorities that can come to a correct vote (however correctness is defined). The problem is that if the average member is worse than a roll of dice, the committee's decisions grow worse, not better: Staffing is crucial.

Parliamentary procedure, such as Robert's Rules of Order, helps prevent committees from engaging in lengthy discussions without reaching decisions.

Staff organization or cross-functional team

A staff helps an expert get all his work done. To this end, a "chief of staff" decides whether an assignment is routine or not. If it's routine, he assigns it to a staff member, who is a sort of junior expert. The chief of staff schedules the routine problems, and checks that they are completed.

If a problem is not routine, the chief of staff notices. He passes it to the expert, who solves the problem, and educates the staff -- converting the problem into a routine problem.

In a "cross functional team", like an executive committee, the boss has to be a non-expert, because so many kinds of expertise are required.

Matrix organization

See also: matrix management

This organizational type assigns each worker to two bosses in two different hierarchies. One hierarchy is "functional" and assures that each type of expert in the organization is well-trained, and measured by a boss who is super-expert in the same field. The other direction is "executive" and tries to get projects completed using the experts. Projects might be organized by regions, customer types, or some other schema.


This organization has intense competition. Bad parts of the organization starve. Good ones get more work. Everybody is paid for what they actually do, and runs a tiny business that has to show a profit, or they are fired.

Companies who utilize this organization type reflect a rather one-sided view of what goes on in ecology. It is also the case that a natural ecosystem has a natural border - ecoregions do not in general compete with one another in any way, but are very autonomous.

The pharmaceutical company GlaxoSmithKline talks about functioning as this type of organization in this external article from The Guardian.

subordinate report to more than one boss

"Chaordic" organizations

The chaordic model of organizing human endeavours emerged in the [1990]s, based on a blending of chaos and order (hence "chaordic"), comes out of the work of Dee Hock and the creation of the VISA financial network. Blending democracy, complex system, consensus decision making, co-operation and competition, the chaordic approach attempts to encourage organizations to evolve from the increasingly nonviable hierarchical, command-and-control models.

Similarly, see emergent organizations, and the principle of self-organization. See also group entity for an anarchist perspective on human organizations.

Organizations that are legal entities: government, international organization, non-governmental organization, armed forces, corporation, partnership, charity, not-for-profit corporation, cooperative, university.

See also

Related lists

  • List of environmental organizations
  • List of trade unions
  • List of civic, fraternal, service, and professional organizations
  • List of organizations


  • Organisations by Richard Scott: ISBN 0132663546
  • Organisations and Institutions by Richard Scott
  • Understanding organisations by Charles Handy.
  • The Peter Principle, Dr. Laurence J. Peter and Raymond Hull, Pan Books 1970 ISBN 0-330-02519-8
  • The Nature of the Firm by Ronald Coase.
  • Organizing from the Inside Out by Julie Morgenstern, Owl Books 1998 ISBN 0805056491
  • Organization Design: Fashion or Fit by Henry Mintzberg, Harvard Business Review (January February, l98l).

External links

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