Organization Theory

Structure, Design, and Applications

Third Revised Edition

Stephen P. Robbins and Mary Mathew

C H AP T E R

PART II: THE DETERMINANTS: WHAT CAUSES STRUCTURE?

An Overview

2010 Dorling Kindersley India Pvt. Ltd.

All rights reserved.

PowerPoint Presentation by Rajeesh Viswanathan

Jansons school of Business

After reading this chapter, you should be able to:

Define organization size.

List the pros and cons of large size.
Summarize the conclusions from the Aston Groups
research.
Describe the effect of size on complexity, formalization, and
centralization.
Explain the effect of size on the administrative component.
List which OT issues are of greater and lesser importance to
small business managers.

DEFINITION
ORGANIZATION

SIZE IS DEFINED AS
THE TOTAL NUMBER OF EMPLOYEES.
IT IS ASSUMED THAT THE NUMBER
SHOULD
BE
MORE
CLOSELY
ASSOCIATED WITH STRUCTURE THAN
WITH ANY OTHER SIZE MEASURE.

ADVOCATES OF THE SIZE

IMPERATIVE
PETER

BLAU CONCLUDED BASED ON

HIS RESEARCH, SIZE IS THE MOST
IMPORTANT CONDITION AFFECTING THE
STRUCTURE OF THE ORGANIZATIONS.
ASTON GROUP CONCLUDED INCREASED
SIZE WAS ASSOCIATED WITH GREATER
SPECIALIZATION AND FORMALIZATION.

SIZE AND COMPLEXITY

IMPACT

OF SIZE ON COMPLEXITY IS AT
A DECREASING RATE ACC TO BLAU.
BUT OTHER CRITICS HAVE
SUGGESTED POTENTIAL ALTERNATIVE
HYPOTHESES CONFIRMING THE
IMPACT OF SIZE ON COMPLEXITY.

SIZE AND FORMALIZATION

ASTON

FINDINGS SUPPORT THAT

SIZE AFFECTS FORMALIZATION.
27 STUDIES ON THIS CONCLUDED
THAT THE RELATIONSHIP BETWEEN
SIZE AND FORMALIZATION WAS
HIGH, POSITIVE AND STATISTICALLY
SIGNIFICANT.

SIZE AND CENTRALIZATION

A

RESEARCH WAS MIXED IN

DEMONSTRATING THAT SIZE LEADS
TO DECENTRALIZATION.
IN OWNER- MANAGED ORGANIZATION,
THE RESULT INTERPRETED ON THEM
WERE THAT THE EFFECTIVENESS WAS
LOST WHEN NO MOVE TOWARDS
DECENTRALIZED DECISION MAKING
AS SIZE INCREASES.

SPECIAL ISSUES RELATING TO

ORGANIZATION SIZE

ADMINISTRISTRATIVE-COMPONENT DEBATE
PARKINSONS LAW - According to Parkinson, the number of
officials in an organization and the quantity of work to be
done are not related to each other at all

THE CURVILINEAR ARGUMENT - the administrative component is greater for

smaller and larger organizations than for those of moderate size. As
organizations move out of the small category, they enjoy the benefits from
economies of scale. But as they become large, they lose these benefits and
become so complex as to require signifi cant increases in the
administrative component to facilitate coordination and control.

Contd

ORGANIZATION THEORY AND SMALL BUSINESSES

ISSUES OF REDUCED IMPORTANCE.

ISSUES OF INCREASED IMPORTANCE.

CONCLUSIONS ON ALL THESE ISSUES