What is organization theory? Understanding organizaitons & theories

Organization Theory is a vast topic with many types of theories. Before tackling different organization theories and even before dealing with ‘organization theory’, it’s useful to understand the terms “organization” and “theory” separately.

Organization and organizing

When organization is used as a noun, it is an entity that can be located in time and space. For example, the University of California, Irvine is an organization that can be located in time and space (in Irvine, California). It is a physically located place where a repeated set of activities take place, such as teaching and research. Similarly, our local bookstore, coffee shop, and barbershop are all examples of organizations. Organizations can be for-profit like Amazon or Apple, not for profit, like Oxfam International or The Salvation Army, or they can be part of the federal, state, or local government such as the Mayor’s office, or the Department of Education.

What about a book club that only meets online? Or a protest movement? Are these organizations? Certainly, all of these organizations also engage in a certain pattern of activities or a process. A process is defined as a series of actions, changes, or functions aimed to achieve certain goals. Teaching or research, providing goods or services, engaging in humanitarian work, or making a profit are all examples of processes.

Organizations, therefore, are all about organizing. In that sense, the terms organization and organizing are codependent or two sides of the same coin. In sum, organizations can be defined as entities or as processes. So a protest movement in which participants might not know each other, or there might be different people during each protest, or where people do not meet regularly is indeed an organization. The organization comes into existence by the act of organizing.

Theory

A theory can be defined as a set of ideas or related concepts that can be used to explain and understand an event, situation, or social phenomena. Social phenomena are considered as including all behavior which influences or is influenced by organisms sufficiently alive to respond to one another (John Markey, 1926). What are concepts? Concepts are mental categories into which we can sort, organize, and store ideas in memory. Self esteem, performance, love, power, control, are all examples of concepts. For instance, sociologists use concepts like overcrowding and crime (concepts) to explain poverty (social phenomenon). An organizational scientist uses concepts like roles and responsibilities (concepts) to explain their effect on employee behavior (social phenomena).

Organization theory

Organization Theory is a set of theories that explain and help us understand how organizations function. Organizations and people within organizations are the focus of organization theory. Organization theories could focus on the total organization, groups of employees such as departments or divisions, or on individual employees. These theories offer ideas, models, and tools to design and manage effective organizations. These theories can help us understand the interconnections between different parts of an organization and manage the complexity of organizations.

An important function of organization theory is that it provides a structured way to talk about organizations, as units and the subunits, groups, and individuals who work within an organization. It can help managers better achieve organizational goals. It can help employees improve their work environment, leverage opportunities to assert more authority in decision-making processes, and empower themselves. Depending on how scientists and practitioners define and study organizations (either as a noun or a verb), theories produce different insights. In this way, organization theory provides a systematic pathway to understand and talk about organizations.

Hatch (2018) classifies all these theories into three major categories.

Modernist theoretical perspective theories look for causal explanations to explain a phenomenon of interest. The basic assumption that guides this type of theory building is objective ontology and positivist epistemology. They treat organizations as real entities (nouns) and believe that organizations are driven by norms of rationality.

On the other hand, some theories treat organizations as ongoing processes. Governed by subjective ontology and interpretivist epistemology, symbolic perspective theories try to understand human behavior within the organizational context. These theories focus on processes that uncover how life unfolds within an organization.

The third category of theories study organizations as a site of power relations. That is, these theories study how some narratives overpower and empower some people while suppressing others. These theories take a critical view of management practices by encouraging reflexivity and awareness of ethical and moral implications of managing, theorizing, and organizing. There are theories about almost every aspect of organizations. These include theories about the structure (social and physical) of the organization, people, effectiveness of teams, leadership, organizational change, organizational innovation, management strategy, efficiency, and more. Some well-known organization theories are listed below.