Organization Theory The Structure of the Firm: Design

  1. 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
  2. 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
  3. Step 3: Uncertainty Analysis
    - Assign coordination responsibilities to the units performing those activities
  4. 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)
  5. 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
  6. 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
Card Set
Organization Theory The Structure of the Firm: Design
The Structure of the Firm