1. Organizational Behavior and Control Mechanisms in New Venture Creation
Prof. Alexander Settles

2. Introduction to OB
Define organizations of differing types and differing objectives. Normative and positive theories.
Division of labor, specialization, productivity, economies of scale and the problem of co-ordination (motivations/incentives and information).
Markets and organizations as alternative coordinating mechanisms. Contrasting market and employment contracts (incentives, risk sharing and information assets).

3. Introduction to OB The market organizational contractual continuum.
Competitive markets, ‘real’ markets, long term contracts (fixed cost to cost plus), joint ventures, alliances, informal networks, franchising etc.
Coordination and role of: motivation/incentives, communication/ information/knowledge, bargaining power and authority, culture/ norms/trust/commitment, democratic process.
Introduction to the nature of Hierarchical organizations.
Vertical boundaries (make-buy)
Horizontal boundaries (Divisional, conglomerates etc).
Hierarchical structures (size, span, depth).
Ownership/governance.

4. Theories of boundaries
Transaction costs; assumptions, bounded rationality, opportunism, incomplete contracts; transactional characteristics, asset specificity, uncertainty, complexity, frequency.
Property rights theory.
Monopoly power, information knowledge and rents, competitive advantage.
Role of managerial objectives/motivation.
Role of legislation (national variations).
Ideology.

5. The evolution of organizations
Evolution of contracts.
Evolution of organizational types: peer groups, multifunctional; multi-divisional, conglomerates, Alliances, networks, long term (relational), contacting.
Centralized v decentralized organization (discretion).

6. Studying organizations
Organization, group and individual levels of study and their inter-relationship.
Contribution of statistical models and case studies.
Contribution of elementary game theory (one-shot and repeated).
Contribution of network (graph theoretic) models.

7. Game Theory

8. Organizations as contractually coordinated mechanisms
Taylor, standardization, rationalization and scientific management; “Fordism”.
Theories and critiques of bureaucracy.
Centralization, decentralization and discretion/incomplete contracts.
Organization as an algorithm.
Control loss, coordination loss.

9. Organizations as Incentive/ Motivationally coordinated mechanisms
Introduction to principal agent theory.
Team production and externalities.
Psychological models of motivation: Human relations; Human resource management; Group and team context (production); Motivational reactions to organizational design.

10. Organizations as authority/ power/coordinated mechanisms
Nature of power. Authority and influence.
Bargaining power.
Sources of power.
Power and participation/ decentralization.

11. Organizations as Information/ Knowledge distributively coordinated mechanisms
Coordination and information (games).
Theory of teams.
Hidden information/action.
Demand for information and participation.

12. Organizations as ‘Culturally’ coordinated mechanisms
Nature of culture.
Trust, leadership, sacrifice and commitment.
Social capital.
Corporate culture/ambient cultures.
National business systems.

13. Determinants of hierarchal structures (shape).
Contingency theory.
Population ecology/institutional theory.
Hierarchy (or hybrid organization) as an optimal mechanism – given operating environment - for combining: rules/contracts, incentives, authority, information, culture.

14. Corporate Governance
Ownership and control; participation and organizational democracy.

15. What is Organizational Behavior?
Organizational behavior (OB) is the study of:
Human behavior in organizational settings
The interface between human behavior and the organization
The organization itself

16. The Nature of Organizational Behavior

17. The Importance of Organizational Behavior
Organizations can have a powerful influence on our lives:
Most people are born and educated in organizations
Most people acquire most of their material possessions from organizations
Most people die as members of organizations
Many of our activities are regulated by governmental organizations
Most people spend most of their lives in organizations

18. Why Study OB?
Studying organizational behavior can clarify factors that affect how managers manage by:
Describing the complex human context of organizations
Defining the associated opportunities, problems, challenges, and issues
Isolating important aspects of the manager’s job
Offering specific perspectives on the human side of management

19. Why Study OB? (cont’d) Studying OB helps managers understand:
The behaviors of others in the organization
Personal needs, motives, behaviors, feelings and career dynamics
Attitudinal processes, individual differences, group dynamics, inter group dynamics, organization culture, power, and political behavior
Interactions with people outside of the organization and other organizations
The environment, technology, and global issues

20. Organizational Behavior and the Management Process
Management Functions
Planning
Organizing
Leading
Controlling
Resources Used by Managers
Human
Financial
Physical
Information

21. Functions of Management
Planning
Determining an organization’s desired future position and the best means of getting there
Organizing
Designing jobs, grouping jobs into units, and establishing patterns of authority between jobs and units
Leading
Getting organizational members to work together toward the organization’s goals
Controlling
Monitoring and correcting the actions of the organization and its members to keep them directed toward their goals

22. Basic Managerial Functions

23. Important Managerial Roles

24. Critical Managerial Skills
Technical
Skills necessary to accomplish specific tasks within the organization
Interpersonal
Skills used to communicate with, understand, and motivate individuals and groups
Conceptual
Skills used in abstract thinking
Diagnostic
Skills to understand cause-effect relationships and to recognize optimal solutions to problems

25. Figure 1.3 Managerial Skills at Different Organizational Levels

26. Contemporary Organizational Behavior
Characteristics of the Field
Interdisciplinary in focus
Descriptive in nature
Basic Concepts of the Field
Individual processes
Interpersonal processes
Organizational processes/characteristics

27. Contemporary Organizational Behavior
Contextual Perspectives on Organizational Behavior
Systems Perspective
Situational Perspective
Contingency
Interactional

28. The Systems Perspective
An interrelated set of elements that function as a whole—inputs are combined/transformed by managers into outputs from the system.
Value of the Systems Perspective
Underscores the importance of an organization’s environment
Conceptualizes the flow and interaction of various elements of the organization.

29. The Situational Perspective
Recognizes that most organizational situations and outcomes are influenced by other variables
The Universal Model
Presumes a direct cause-and-effect linkage between variables
Complexities of human behavior and organizational settings make universal conclusions virtually impossible

30. The Systems Approach to Organizations

31. Universal Versus Situational Approach

32. Interactionalism: People and Situations
Interactionalist Perspective
Focuses on how individuals and situations interact continuously to determine individuals’ behavior
Attempts to explain how people select, interpret, and change various situations.

33. The Interactionalist Perspective on Behavior in Organizations

34. Managing for Effectiveness
Managers work toward accomplishing the various goals (outcomes) that exist at specific levels in an organization:
Individual-level outcomes
Group-level outcomes
Organizational-level outcomes

35. Managing for Effectiveness

36. The Nature of Organization Structure
A goal-directed social entity with deliberate processes and systems
Organizational Goals
Objectives that management seeks to achieve in pursuing the firm’s purpose
Strategies
Specific action plans that enable the organization to achieve its goals and thus its purpose

37. The Nature of Organization Structure (cont’d)
The system of task, reporting, and authority relationships within which an organization does its work
Purpose of structure is to order and coordinate the actions of employees to achieve organizational goals
“Structure follows strategy”

38. The Nature of Organization Structure (cont’d)
Organized Effort Premise
People can accomplish more by working together than they can separately
Proper coordination is needed to realize the potential gains from collective efforts
Analysis of Organizational Structures
Configuration (organization chart)
Operational characteristics
Responsibility and authority

39. Structural Configuration
Organization Chart
Describes the structure of an organization
Shows all people, positions, reporting relationships, and lines of formal communication
Depicts reporting relationships and work group memberships
Shows how positions and small work groups are combined into departments which make up the shape (configuration) of the organization
Basic Requirements of Structure
Division of labor
Coordination of divided tasks

40. Examples of Organization Charts

41. Structural Configuration (cont’d)
Division of Labor (Specialization)
The way the organization’s work is divided into different jobs to be done by different people
Organizations, in order to be successful, must have highly trained specialists who know their specific jobs very well
Coordinating the Divided Tasks
Mechanisms to help coordinate the divided tasks
Departmentalization
Span of control
Administrative hierarchy

42. Structural Configuration (cont’d)
Departmentalization
The manner in which divided tasks are combined and allocated to work groups
A consequence of the division of labor
Ways to departmentalize tasks:
Business function
Process
Product or service
Customer
Geography

43. Advantages and Disadvantages of Division of Labor
Efficient use of labor
Reduced training costs
Increased standardization and uniformity of output
Increased expertise from repetition of tasks
Routine, repetitive jobs
Reduced job satisfaction
Decreased worker involvement and commitment
Increased worker alienation
Possible incompatibility with computerized manufacturing technologies

44. Structural Configuration (cont’d)
Departmentalization (cont’d)
Span of control (also span of management)
The number of people who report to a manager
The smaller the span of control the more a manager can maintain close control over workers and stay in contact with daily operations
Size is inversely related to the span of control

45. Structural Configuration (cont’d)
Departmentalization (cont’d)
Span of control (also span of management)
The number of people who report to a manager
The smaller the span of control the more a manager can maintain close control over workers and stay in contact with daily operations
Size is inversely related to the span of control

46. Departmentalization by Business Function and by Process

47. Departmentalization by Customer

48. Departmentalization by Customer and by Geographic Region

49. Mixed Departmentalization