Organization Theory The Structure of the Firm: Design

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Step 1: Identify Basic Activities
- - Clusters of homogenous activities in terms of the techniques employed (same 'specialization')
- - Lower Bound: Technical unseparability
- - Upper Bound: They should be more "micro" than the units under re-design
Step 2: Assess types of interdependence among activities
- - Pooled: deriving from the pooling and shared use of resources
- - Sequential: deriving from input-output resource transfer
- - Reciprocal: deriving from two ways input-output relations
- - Intensive: deriving from joint transformation of common object
Step 3: Uncertainty Analysis

- Assign coordination responsibilities to the units performing those activities
Step 4: Specialization Analysis
- - Evaluate technical affinity between activities (knowledge that have bee mastered by the specialists performing each tasks)
- - Evaluate cultural affinity between activities (orientation to standardization vs innovation; to tasks vs to people; to short vs long term)
Step 5: Unit Size
- - The dimension of a unit should be such that technical and human resources are fully utilized
- - The dimension of a unit should not exceed the maximum "span of control" (max n of reporting jobs; may vary from 6-8 for complex jobs to 50 and more for standardized or highly autonomous job)
- - The same unit should not include the controller functions of an activity if conflict of interest is present
Step 6: Inter-Unit coordination
- - Coordinate residual inter-unit reciprocal and intensive interdependences through integration roles and units
- - Coordinate residual inter-unit sequential and pooled interdependences through formal rules, programs and procedures, hierarchical intervention

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Organization Theory The Structure of the Firm: Design

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The Structure of the Firm

Updated

2010-12-17T22:40:16Z

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