Organizational Behavior

Organizations are value-creation systems that take inputs from the environment and use skills and knowledge to transform these inputs into finished goods and services. The use of an organization allows people jointly to increase specialization and division of labor, use large-scale technology, manage the organizational environment, economize on transaction costs, and exert power and control—all of which increase the value the organization can create.

Organizational design is the process by which managers select and manage aspects of structure and culture so an organization can control the activities necessary to achieve its goals. Organizational design has important implications for a company’s competitive advantage, its ability to deal with contingencies and manage diversity, its efficiency, its ability to generate new goods and services, its control of the environment, its coordination and motivation of employees, and its development and implementation of strategy. Organizational change is the process by which organizations redesign and transform their structures and cultures to move from their present state to some desired future state to increase their effectiveness. The goal of organizational change is to find new or improved ways of using resources and capabilities to increase an organization’s ability to create value and hence performance.

Managers can use three approaches to evaluate organizational effectiveness: the external resource approach, the internal systems approach, and the technical approach. Each approach is associated with a set of criteria that can be used to measure effectiveness and a set of organizational goals.

CHAPTER OUTLINE

1.1 What is an Organization?

Organizations are extremely important in today’s world. Though organizations are intangible, they have a role to play in all areas of our life. A grouping of people and other resources to produce goods and services is the essence of organizing. An organization is a tool...