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Subject Commerce

Paper No and Title 1: Management Concepts & Organisational Behaviour

Module No and Title 9: Organizational behaviour: An Introduction

Module Tag COM_P1_M9

COMMERCE Paper No. 1: Management Concepts & Organizational

Behaviour
Module No. 9 : Organizational Behaviour – An Introduction
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TABLE OF CONTENTS

COMMERCE Paper No. 1: Management Concepts & Organizational

Behaviour
Module No. 9 : Organizational Behaviour – An Introduction
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1. Learning Outcomes
After studying this module, we shall gather information to:

After studying this module, you shall be able to:

• Identify the emerging trends of Organizational Behavior

• Know the Foundations and definition of Organization Behavior
• Identify group, inter-group and organizational processes
• Analyze the goals and elements of Organizational Behavior

2 Emerging trends of Organizational Behavior

Organizations are everywhere and managing people is considered as one of the most
critical features of a job. Unlike the other factors of production (material and
technology), the human capital is quite complex and unpredictable. Their creative
bent of mind can, no doubt, be utilized to enhance productivity, but at the same time,
it can be deployed to frustrate rather than facilitate. Organization Behavior, therefore,
has emerged as a scientific discipline which explores and suggests remedial actions to
control and empower the tricky and complicated ‘people dimension’ of organizing
and managing.

Organization Behavior is the systematic study and the careful application of how
people- as individuals and as groups - act within an organization. It is a scientific
discipline in which varied research studies and conceptual developments are constantly
contributing to the knowledge base. It is traditionally focused on the motivation and
coordination of an organization's internal stakeholders or employees.
The traditional definition of organizational behavior is thus, the study of individuals and
their behavior within the context of the organization in a workplace setting.

However, with the passage of time, it has become essential to redefine OB since the very
concept of ‘organization’ has changed and so is the ‘behavior’. Traditionally, Robbins
(2003) defined an ‘organization’ as a ‘consciously coordinated social unit, composed of
two or more people, which functions on a relatively continuous basis to achieve a
common goal or set of goals. It’s characterized by formal roles that define and shape the
behavior of its members’. However, a modern organization can be defined as an open
system that has continuous interaction with the environment through the exchange
of inputs and outputs with the bidirectional feedback.

COMMERCE Paper No. 1: Management Concepts & Organizational

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Module No. 9 : Organizational Behaviour – An Introduction
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With the globalization of business and increasing diversity

within the workforce in today’s workplace, there is a remarkable transformation in the
running of the organizations and industries. Organizations like Infosys effectively
combine people and scientific technology. With the rapid advancement that science has
brought mastering technology has become a tedious task and when the human angle is
added to the mix, the socio-technical system that emerges becomes all the more
troublesome to comprehend.

Transformed Role of the Manager

Taking into consideration, that organizations do not operate or survive in a static

environment, organizational behavior has expanded its scope to include the
organization as a unified entity, which narrows down on the macro and micro view of
the business. The challenges have made a down reaching influence on the various
aspects of human life, with deep implications over the management of organizations.
Although, people were regarded as important in managing organizations, their
centrality has become sharper in today’s changing world. The role of the
manager has been redefined due to globalization since the economy is knowledge
driven and business is customer-centric. Earlier, the role of a manager was to get
things done through other people.

They achieved their goals through planning, organizing/ directing and controlling the
internal stakeholders. Now, there is a visible change. Managers today have become
research oriented. They are receptive to new models. They support related research
and hungrily experiment with new ideas.

Garvin (2013) observed in his case study (“Google’s Project Oxygen: Do Managers
Matter?” (case number 9-313-110, published April 2013) that since the early days of Google,
people throughout the organization had felt that managers are not required at all- ‘It was a
company built by engineers for engineers…. most engineers, wanted to spend their time
designing and debugging, not communicating with bosses or supervising other workers’
progress.’ Hence, ‘Google experimented with a completely flat organization, eliminating
engineering managers in an effort to break down barriers to rapid idea development and to
replicate the collegial environment they’d enjoyed in graduate school. That experiment
could last only for a few months. ‘They relented when too many people went directly to
Page with questions about expense reports, interpersonal conflicts, and other nitty-gritty
issues. And as the company grew, the founders soon realized that managers contributed in
many other, important ways—for instance, by communicating strategy, helping employees
prioritize projects, facilitating collaboration, supporting career development, and ensuring
that processes and systems aligned with company goals.’

COMMERCE Paper No. 1: Management Concepts & Organizational

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Module No. 9 : Organizational Behaviour – An Introduction
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Hence, the role of the manager has moved beyond

merely planning, organizing, controlling and directing. OB now targets on the
establishment of five competencies which are – Managing one’s own self; Managing
business communication; Managing ethics and culture; Managing workforce
diversity and teams; and managing the dynamics of change. The first and the
foremost is managing ‘self’. Managing self includes the core ability of identifying
ones’ strengths and weaknesses, which will help in maintaining work-life balance.
The concept of ‘emotional intelligence’ is to be included in managing self which will
assist in building the career graph of the manager. The second important competency
that a manager needs to develop keeping the emerging trends in mind is to ‘manage
business communication’ – a skill that encompasses the ability to use all the modes of
transmitting, understanding, and receiving ideas, information, thoughts and feelings
(verbally, nonverbally and electronically). The third competency that needs to be
focused is managing ethics and culture. Managing ethics and culture refers to the
ability to identify and describe the principles of ethical decision making; assess the
importance of ethical issues; apply governmental laws and regulations; demonstrate
dignity and respect for others in working relationships; understand and appreciate the
cultural differences that make us so unique; understand and motivate employees with
different values and attitudes; and communicate in the language of the country with
which the individual has working relationship. The manager must have the
competency to manage workforce diversity in teams. It includes the ability to value
unique individual and group characteristics. Another important competency is the
ability to ‘manage change’. It includes the ability to recognize and implement the
needed adaptations or entirely new transformations in the employees, strategies,
structures or technology. Organization behavior assists in developing the above
mentioned competencies.

Therefore, we can say that management skills revolve round technical skills, human
skills and conceptual skills which have been redefined due to the emerging trends.
The emerging trends of Organization Behavior issues are as follows:

1 Globalization
2 Workforce diversity and the transformed employment relationship
3 Technological advancements
4 Workplace ethics
5 Outsourcing

2.1. Globalization
Over the span of less than two decades, the world has progressed to become inter-related
due to globalization. The word ‘Globalization’ can be defined as ‘a process of economic
integration at the international level ‘(Pareek, 2004). To illustrate this, as per the reports
of Times of India (2012), General Electric which was making cheaper and stripped down
versions of its ECG and Ultrasound machines in India is now taking them to the world

COMMERCE Paper No. 1: Management Concepts & Organizational

Behaviour
Module No. 9 : Organizational Behaviour – An Introduction
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markets. Nestle’s high nutrients and low cost variants of

Maggie noodles (at Rs. 2/- a packet), formulated especially for the poor rural masses of
India and Pakistan is on its way to Australia and NewZealand. Similarly, laptop and
desktop parts are produced in 6 distinct countries of the world are assembled in Taiwan,
transported by Dutch companies to Indian consumers. Hence, in order to remain
competitive in this rapidly transforming globalized world, majority of the companies
have entered into joint ventures, alliances, licensing agreements etc., which has altered
the profiles of both the employees as well as the customers. The workforce diversity has
increased manifold and people from different cultures are working together. Due to this
reason, the need for global leaders, who can manage expatriate assignments and
culturally diverse teams, has arisen. Pareek (2004) observes that with the whole world
being converted into a single global marketplace, individuals and organizations buy raw
material, technology, services, and resources from the provider who offers high quality
with low price. In this context, the most complex and critical component that can be
identified is the human resource. Organizations are in a state of flux and they need to
change their structure in order to meet the challenges in the globalized corporate
environment.

2.2 Workforce diversity and the emerging employment relationship

In today’s workplace, we have come to understand that ‘Great management’ is about
character, not about techniques. In fact, it is easier to buy technology, and to borrow both
financial and material resources, but it is difficult to buy human processes, in the form of
speedy decision making, effective negotiation, team development, leadership
development, strategy formulation etc. Still more, it is difficult to retain talented
employees. It is essential not only to nurture talents, but also be able to retain them.
Although people have been regarded as the most important asset, their centrality has
become sharper in today’s fast changing world. Whereas globalization refers to
differences between people owing to different countries; work-force diversity refers to
differences that exist between people within the same country.
Management of workforce is a great concern to everyone in a changing work
environment and is the biggest challenge of the 21st century, having important
implications for management practice. Organization Behavior has contributed a lot in this
domain. Deshwal, P. and Choudhary, S. (2012) observed in their study that:

“People no longer live and work in an insular marketplace; they are now part of a worldwide
economy with competition coming from nearly every continent. For this reason, profit and
non-profit organizations need diversity to become more creative and open to change.
Maximizing and capitalizing on workplace diversity has become an important issue for
management today. Diversity is generally defined as acknowledging, understanding,
accepting, valuing and celebrating differences among people with respect to age, class,
ethnicity, gender, physical and mental ability, race, sexual orientation, spiritual practice, and
public assistance status.”

COMMERCE Paper No. 1: Management Concepts & Organizational

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Module No. 9 : Organizational Behaviour – An Introduction
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Hence, managers need to shift their philosophy from treating everyone alike to
recognizing differences and responding to those differences in ways that will ensure
employee retention and greater productivity while, at the same time, not discriminating.

A more diverse workforce results in:

 respect for individual and cultural differences

 A legal system that emphasizes equal opportunities and non-discrimination at
work place.
 High performance since it leads to nurturing the best talents and not just meeting
the targets / numerical goals.

Diversity needs to be promoted in an organization in a planned manner. Companies like

Toyota, Walmart, and Microsoft etc. understand how the uniqueness of each employee
can contribute in creating collaborative relationships. Pareek (2004) opined that empathy,
openness, democratic values, and supportive behavior help to develop a mindset
conducive to diversity. Pareek (2004) explained diversity in terms of’ demographic (age,
gender, education), social (religion, language, region, caste, tribes, physical and mental
handicaps) and ideological (different ways of perceiving issues). He observed that
‘…..the demographic profile in India is changing very fast. Younger people are entering
the workforce. Because of the spread of education, legislation, and social movements,
more women and more members of minority communities are being employed by
organizations. Organizations are finding that physically and mentally challenged persons
can be valuable human resources for specific jobs.’

Datta, K.(2013, Business Standards) observed that ‘Tata Group Chairman, Cyrus
Mistry had established his progressive credentials by unequivocally stating that he was
looking forward to seeing more women in key leadership positions at Tata Global
Beverages (TGB). He is on strong ground here because this company, like many fast-
moving consumer goods companies worldwide, has an impressively large complement
of women - 41 per cent, according to its annual report (notably too, TGB’s joint venture
with Starbucks is headed by a woman). However, a little over a year ago, Britannia’s
Managing Director Vinita Bali, with over a decade of experience of heading an Indian
company, wryly observed that India Inc is “still very much an old boys’ network”.

The requirement of a safer and healthier work environment in the current dynamic market
situations has propelled the need to recognize the relevance of developing and retaining
high performing managers. Fundamentally, organizational success or failure or stagnation
depends on the impact that people have upon their organizations. This is the focus of

COMMERCE Paper No. 1: Management Concepts & Organizational

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Module No. 9 : Organizational Behaviour – An Introduction
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Organization Behavior, which can be defined as an

interdisciplinary behavioral science studying phenomenon related to processes of
organizations and their various human units. Human processes concern not only
individual employees and other members associated with organizations, but are also
related to other human units of an organization. Individuals come to work in the
organization and love to work in it depending upon the role that they get or feel alienated,
depending on the role that they occupy within the organization. The roles, therefore,
require much attention. Organization behavior is related to the entire gamut of roles with
respect to individual and group dynamics.

2.3 Technological Advancements

The pace of change has been accelerated in an unprecedented way due to the
advancement in technology over the last century. With the growth of virtual groups and
virtual organizations, the manager’s role has increased manifold from a role-taker to a
role-maker. The world trade barriers have fallen due to the increased intervention and
advancement in the field of Information Technology. Handful of people in the world used
to operate on computers in the mid 1980’s, but now it is as common in the homes as the
radio used to be in the 1940’s. E-commerce has changed the complete scenario of
working. The consumers can now purchase through internets. E- Business has fastened
the pace of B2C i.e. business to customer transaction as well as B2B i.e. business to
business transactions. Such changes are bearing an impact on the stock-markets as well.
Rapid technological advancements in transportation and communications in recent
decades have brought the people of the world closer together in ways we could barely
have imagined a decade ago. In India, communication has been greatly facilitated by
information technology. The internet and intranets has facilitated information sharing,
while cellular technology and teleconferencing has multiplied interpersonal and
intergroup interactions and discussions. These have brought down the delays in decision
making and is a cost effective method of bringing people together over long distances. In
this context, the relevance of human processes has increased tremendously.

2.4 Workplace Ethics

The dynamic corporate world is marked by intensive cut-throat competition and the
maxim of ‘survival of the fittest’ holds true as it was earlier. Due to intense work
pressures and to meet the expectations which at times are unrealistic, it is increasingly
becoming difficult to maintain work-life balance. These reasons propel the workers to at
times resort to breaking the rules, cutting corners and sometimes indulging in
questionable practices. Hence, members of the organization find themselves facing
ethical dilemmas and at times do not know whether they should blow the whistle or not?
What constitutes good behavior has never been clearly defined. For instance,

COMMERCE Paper No. 1: Management Concepts & Organizational

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Module No. 9 : Organizational Behaviour – An Introduction
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As per the report of Times of India, on 18th July 2012, Maruti's Manesar plant was hit
by violence as workers at one of its auto factories attacked supervisors and started a
fire that killed a company official and injured 100 managers, including two Japanese
expatriates. The line differentiating between right and wrong has become all the more
blurred.

It is not one but many such events that have happened all over the world due to which it
is being realized that today’s managers need to create a climate that portrays strong
ethical approach. Organization behavior focuses on the why and how to create ethical
work environment. It enables them to write and distribute the code of ethics to guide
employees through ethical dilemmas. Now they are offering trainings and seminars in
order to improve ethical behavior and create a healthy climate in which minimum degree
of ambiguity exists between what constitutes right and wrong behavior.

2.5 Outsourcing
Increasing completion has led to the development of cost-effective strategies. The focus
is to make an organization as lean as possible. The functions and services which do not
form the core of an organization are normally discontinued. Similarly, the organizations
are indiscriminately buying any expertise/service/function which is needed by the
organization and is very expensive, but can be arranged from outside at a lower cost. This
process of buying a function or a service from outside sources is called outsourcing. The
human resources are also being outsourced. Even the personnel training is being
outsourced on account of the fact that training is not the core function of the organization.
It will be comparatively cheaper for them to sign the MOU (memorandum of
understanding) with training organizations rather than developing high quality trainers
themselves. Hence, outsourcing requires lot of planning based on the competencies that
the management wishes to develop and retain.

3 Defining OB
Put on the Thinking Cap: What is Organization Behavior?

The recent progressive trends that find a mention above have redefined organization
behavior as the study and application of how people – as individuals and as groups – act
COMMERCE Paper No. 1: Management Concepts & Organizational
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Module No. 9 : Organizational Behaviour – An Introduction
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within organizations. It is an interdisciplinary behavioral

science studying phenomenon and dynamics (processes) of organizations, their various
human units (individuals, roles, dyads, teams, inter- teams, organizations), and the
organization- environment interface.

Keeping the complexities and growing demands and expectations at work in mind, many
a times certain questions race through the mind like:

 Why are some of my colleagues more successful than others?

 Why do some come to work early, others right on time and one or two actually
come late on a regular basis?
 How will I ever learn to cope up with stress of trying to meet the unrealistic
targets?
 Why does my colleague cooperate with me when I ask her for assistance?
 Why do we talk of work culture when it really never matters?
 Why do we talk of rewards and recognition when they are given to those who
have the power and know the politics?

All these questions are related to people and how they relate to the groups existing within
the organization. This is where organizational behavior can make a significant
contribution. OB organically tantamount to analyzing and applying the information
regarding people’s behavior within and outside a group. It strives to identify ways in
which people can act more effectively. It provides a useful set of tools at many levels for
analysis. For instance, it enables managers not only identify the behavior patterns of the
individuals, but also comprehend the complexities involved in interpersonal relations,
when two people interact. At the next level, OB helps in assessing the dynamics of bonds
innate to smaller groups which can be divided into formal and informal groups.

Interorganization
relationships (Mergers &
Joint Venturs)

Formal Teams & Informal

Groups

Individuals

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Module No. 9 : Organizational Behaviour – An Introduction
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Finally, organizations can be looked upon as a unified

system that has inter-organizational relationships for example, through mergers and joint
ventures. Whereas organization is a collection of interacting and inter- related human and
non-human resources working toward a common goal or set of goals within the
framework of structured relationships, OB also deals with the manner in which the firm
influences the nature of all the humans who are a part of the organization and how
individuals in turn influence organizations.

4 Goals of Organizational Behavior

Organizational behavior is an inter-disciplinary field that draws freely from a number

of the behavioral sciences, including anthropology, psychology, sociology, and many
others. The unique mission of organizational behavior is to apply the concepts of
behavioral sciences to the pressing problems of management, and, more generally,
to administrative theory and practice.

As per Newstrom, J.W. and Davis, K (1996), there are four goals of Organizational
Behavior:

1 To describe
2 To understand
3 To predict and
4 To control

Describe Understand Predict Control

The first is to describe, systematically, the pattern of behavior of humans under a

cornucopia of situations. With the help of this element all the managers and subordinates
are in a position to effectively communicate with each other in the same language. The
second goal is to understand what leads people to behave in a specified way. Managers
would be highly frustrated if they can superficially understand the behavior of the
workers without gaining deep insight into the causes of such behavior. Predicting leads
to better identification by the managers as to which worker will be most productive and
which will be dull, lazy and unproductive at a particular time. This would allow them to
take preventive actions. The final goal of organizational behavior is to control (at least
partially) and develop some human activity at work. Because of the hierarchy of authority
and responsibility, managers will always be held responsible for work done by workers.
COMMERCE Paper No. 1: Management Concepts & Organizational
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Module No. 9 : Organizational Behaviour – An Introduction
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Hence, they should be able to have some exercisable

power over workers behavior. It should always be remembered that wherever
organizations are, there is a need to describe, understand, predict, and better manage
human behavior.

5 The elements of Organizational Behavior?

Organization behavior is a study based on systematic approach rather than gut feeling or
intuition.
As discussed earlier, the organization, is a system which has a defined purpose and goals
with several components that need to be managed. We can, for the sake of convenience,
categorize the factors that need to be managed. These are people, jobs and tasks,
technology, structure and processes. In addition, all the changes that are taking place
outside the organization, i.e., the external environment, has to be monitored in order to
steer the organization effectively. The term effectiveness refers to the successful
accomplishment of the organizational goals. Efficiency refers to the minimization of the
costs while performing the job. Thus, managing organizational behavior for effective and
efficient performance means that all the five components needs to be properly handled.
These are:

1 People: Individual employees who are expected to perform the task allotted to
them; Dyadic relationships such as superior-subordinate interactions; Groups who work
as teams and have the achieve the target; People outside the organizational system such
as customers, clients, suppliers, vendors and government officials.

2 Jobs and tasks: the jobs refer to the sum total of an individual’s assignment at the
workplace. Tasks refer to the various activities that need to be performed to get the job
done (contextual).You will see in the later chapters, how jobs are designed, and the extent
to which the tasks done by the individuals and the groups are inter-related. Hence, jobs
and tasks need to be designed and managed properly.

3 Technology: it refers to the mechanism by which the output or the end-product or

service of the organization is produced. For instance, in manufacturing cars, the assembly
– line technology is used. The structure of the organization will be based on the
technology that will be used. Thus, managing technology is a significant component of
effective and efficient performance.

4 Structure: refers to the various job positions and the levels of reporting
relationships that are set up in an organization. Depending on the nature of job, it can be
hierarchical with a tall pyramid or flat and lean. The entire dynamics of communication,
flow of authority, and rules and regulations in the system differ between the two
structures discussed above. The structure of the organization needs to match with the

COMMERCE Paper No. 1: Management Concepts & Organizational

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Module No. 9 : Organizational Behaviour – An Introduction
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technology, size, and the external environment. Hence,

managers need to manage the structural aspects of the organization as well.

5 Process: refers to the way by which the manager gets the things done. Here we
are referring to the abstract aspects like: how does a manager leads; motivates; manages
the perception of employees; instill the norms and values amongst them; plays a role in
developing the work culture of that place and so on. The personality, managerial
philosophy and leadership style of the manager determines how he/she handles the
critical situations. Thus, the processes used by different people to achieve the
organization goal vary from individual to individual. Some processes are more effective
than others and bring about better results. Hence, the manager is required to be
perceptive about the processes that others use and be flexible enough to achieve the
organizational goals in the right manner.

6 The external environment: The five aspects discussed above constitute the
internal aspects of the organization which constantly interact with the external
environment. The external environment relates to the dynamic global markets, supply
systems, government regulations of the respective countries, the economic-political-and
social climate, the changing demographics of the work force, the cultural environment in
which the organization is embedded. For instance,

For instance, For example, the United Kingdom has a largely market-driven,
democratic society with laws based upon precedent and legislation, whilst Iran has
a political and legal system based upon the teachings and principles Islam and a
Sharia tradition. In sum, organizations are embedded in an environment within
which they operate. Some of the external factors may be completely beyond the
control of the organization to change, such as the cultural, social or governmental
aspects. However, many of the other aspects such as sizing up the markets,
updating the technological changes etc are all under the control of the organization.
However, a manager needs not only to be vigilant but also be adaptable to deal
with difficult and critical situations through sound decision making

However, many of the other aspects such as sizing up the markets, updating the
technological changes etc are all under the control of the organization. However, a
manager needs not only to be vigilant but also be adaptable to deal with difficult and
critical situations through sound decision making.

COMMERCE Paper No. 1: Management Concepts & Organizational

Behaviour
Module No. 9 : Organizational Behaviour – An Introduction
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6 Summary

With sweeping changes taking place both within and globally, the managers need
to develop their interpersonal or people skills to be effective in their jobs.
Organizational behavior is a field of study that investigates the impact that the
individuals, groups and structures have on behavior within the organization, and
then it applies that knowledge to make organizations work more effectively. Its
goals are to make the managers more effective at describing, understanding,
predicting and controlling human behavior.

Organizational behavior offers both challenges and opportunities for managers. It

recognizes differences and enables managers to identify the value of workforce
diversity and practices that need to be changed when managing in different
countries. Ob can assist the mangers to cope in a transient world and manage a
workforce which is reeling under the pressures of challenges. It guides managers in
creating a healthy work culture.

COMMERCE Paper No. 1: Management Concepts & Organizational

Behaviour
Module No. 9 : Organizational Behaviour – An Introduction