Contradictions in Organizations

The contradictions in organizations may arise in areas such as labor-power and its
manifestations in terms of skills and knowledge, the object of labor (complexity of
task), the means of labor (technology), the division of labor, the control of labor,
and the organization of labor. Organizational contradictions can also arise between
functional and historical phases of the work. For example, administrative and
technical innovations designed to increase productivity tend to come into
contradiction with strategies of established authority structures, thus impeding or
nullifying various organizational reform efforts.
Theories
Contingency Theory
Contingency Theory assumes that structures have an impact upon an organizations
efficiency and effectiveness but that there is not one universally efficient
organization form. Thus, organizations have to adapt their structures to the
particular situation they are in to gain efficiency.
Property Rights Theory
- Property rights determine who, when and in which form one has the right to
dispose of a certain resource. The cognitive interest of the theory is to analyze the
generation, distribution and modifications of property rights as well as the effects of
different forms and distributions of property rights upon the behavior of economic
actors and factor allocations.
The following basic assumption is at the centre of property rights theory:
1. Economic actors strive for the maximization of their individual benefit.
Principal Agent Theory
Principal agent theory examines the contractual configuration of the relationships
between the principal and the agent under conditions of unequal distribution of
information, insecurity and risk allocation. The theory analyses typical problems
occurring in contractual relationships and investigates via which incentive, control
and information mechanisms problems can be handled efficiently.
The basic assumptions of agency theory can be summarized as follows: Before the
contract is fulfilled and during fulfillment of the contract, the principal does not have
complete information to be able to deduce the performance efforts of the agent.
The limited observability of the agents behavior leads to a reduction of his
performance and respectively to an opportunistic usage of the principals resources
in those cases where the order fulfillment does not completely correspond to the
agents interest. By means of incentive systems, directive steering of behavior and
by an improvement of information systems, the principal can work against the
opportunistic behavior of the agent.
Institutionalist Approaches
In many organization theories it is presumed that the success of organizations is
primarily dependent upon the efficient steering and coordination of activities by
decision makers. However, institutionalists retort that organizational design

corresponds less to an efficiency criterion but rather to structural elements dictated

by the environment.
The term isomorphism describes a process that obliges the entity within a
population to resemble other entities confronted with the same environment.
Three isomorphism mechanisms:

The first mechanism, coercive isomorphism, results from the formal and
informal pressure that organizations exert on dependent organizations and
from the expectations society has towards organizations.
The second mechanism, mimetic processes, is caused by uncertainty:
Organizations that are confronted with serious problems and unclear
solutions have the tendency to copy another organization which seems to
cope successfully with the problem because the search for new, alternative
solutions is associated with high uncertainty, risks and costs.
The third mechanism, normative pressures, mainly comprises personal
aspects. Here, it is supposed that professional standards as well as the
establishment of inter-organizational networks support the exchange of the
same ideas and thus reduce the potential for idea generation.
Centralization and Decentralization in Organizations

Definitions
Centralized organizational structures rely on one individual to make decisions and
provide direction for the company. Small businesses often use this structure since
the owner is responsible for the companys business operations.
Decentralized organizational structures often have several individuals responsible
for making business decisions and running the business. Decentralized
organizations rely on a team environment at different levels in the business.
Individuals at each level in the business may have some autonomy to make
business decisions.
Advantages of centralization:
Centralized organizations can be extremely efficient regarding business decisions.
Business owners typically develop the companys mission and vision, and set
objectives for managers and employees to follow when achieving these goals.

No Replication of work - Centralized training and standardization of work

leave no scope for replication of tasks or actions. This eliminates additional
expenditure on excessive labor for duplication of work.
Flexibility - In a crisis or an emergency, standardization of work takes just one
step to revise all the activities at once.
Reduced Conflict - When only one person or a small group at the top makes
important decisions, companies experience less conflict and dissent among
lower to mid-level employees.
Fast Execution - With fewer people involved in discussing and deciding on
strategy and action, centralized organizations typically react more quickly to
a dynamic marketplace
Control and Accountability - When centralized leaders are in charge of all
major decisions they retain more control over operation of the company and
development of its culture. Additionally, little question exists over who is
accountable for the results of those decisions

Disadvantages of centralization:

Business owners responsible for making every decision in the company may
require more time to accomplish tasks, which can result in sluggish business
operations.
Dictatorship - An employee is always expected to work according to what has
been dictated to him. No employee at the subordinate level is given the
authority to take a decision on a particular issue, in the absence of the lead.

Advantages of decentralization:
Decentralized organizations utilize individuals with a variety of expertise and
knowledge for running various business operations. A broad-based management
team helps to ensure the company has knowledgeable directors or managers to
handle various types of business situations.
There is less burden on the Chief Executive.
In decentralization, the subordinates get a chance to decide and act independently
which develops skills and capabilities. This way the organization is able to process
reserve of talents in it.
In decentralization, diversification and horizontal can be easily implanted.
In decentralization structure, operations can be coordinated at divisional level which
is not possible in the centralization set up.
Disadvantages of decentralization:
Decentralized organizations can struggle with multiple individuals having different
opinions on a particular business decision. As such, these businesses can face
difficulties trying to get everyone on the same page when making decisions.

Sources:
http://smallbusiness.chron.com/centralized-vs-decentralized-organizational-structure-2785.html
G. Kaiser J. Wolf: Contradictions Within and Between Organization Theories
http://onlinelibrary.wiley.com/doi/10.1111/j.1533-8525.1977.tb02163.x/abstract
http://blog.commlabindia.com/elearning-design/system-of-centralization
http://www.managementstudyguide.com/centralization_decentralization.htm
http://smallbusiness.chron.com/advantages-centralized-organizational-structure-21410.html