Chapter Nine

Organization Size,
Life Cycle, and Decline

Thomson Learning
2004 9-1
 Differences Between Large and Small
Organizations
LARGE SMALL
Economies of Responsive
scale Flexible
Global reach
Regional reach
Vertical hierarchy
Flat structure
Mechanistic
Complex Organic
Stable market Simple
Career longevity and Niche finding
stability Entrepreneurs
Source: Based on John A. Byrne,
Thomson Learning
Is Your Company Too Big?
Business Week, 27 March 1989, 84-94.
2004 9-2
 Organizational
Life Cycle Streamlining,
small-company
thinking

Large Development of teamwork

Continued
maturity

Addition of internal systems Decline

Crisis:
Need for
revitalization
S Provision of clear direction
I
Z Crisis:
E Need to deal
Creativity with too much
Crisis: red tape
Need for
Crisis: delegation
Need for with control
leadership
1. 2. 3. 4.
Small Entrepreneurial Collectivity Formalization Elaboration
Stage Stage Stage Stage
ORGANIZATION STAGES OF DEVELOPMENT
Sources: Adapted from Robert E. Quinn and Kim Cameron, Organizational
Thomson Learning
Life Cycles and Shifting Criteria of Effectiveness: Some Preliminary
Evidence, Management Science 29 (1983): 33-51; and Larry E. Greiner,
Evolution and Revolution as Organizations Grow, Harvard Business
Review 50 (July-August 1972): 37-46.
2004 9-3
 Organization Characteristics During Four
Stages of Life Cycle
1. 2. 3. 4.
Entrepreneurial Collectivity Formalization Elaboration

Characteristic Nonbureaucratic Prebureaucratic Bureaucratic Very Bureaucratic

Informal, one-person Mostly informal, some Formal procedures, Teamwork within
show procedures division of labor, bureaucracy, small-
Structure specialties added company thinking

Products or Single product or service Major product or service Line of products or Multiple product or services
services with variations services lines

Reward and Personal, paternalistic Personal, contribution to Impersonal, formalized Extensive, tailored to
control systems success systems product and department

By owner-manager By employees and By separate innovation By institutionalized

managers group R&D
Innovation
Survival Growth Internal stability, market Reputation, complete
expansion organization
Goal
Top Individualistic, Charismatic, direction- Delegation with control Team approach, attack
Management entrepreneurial giving bureaucracy
Style

Sources: Adapted from Larry E. Greiner, Evolution and Revolution as Organizations Grow,
Harvard Business Review 50 (July-August 1972): 37-46; G. L. Lippitt and W. H. Schmidt,
Thomson Learning
Crises in a Developing Organization, Harvard Business Review 45 (November-December 1967):

2004 9-4
102-12; B. R. Scott, The Industrial State: Old Myths and New Realities, Harvard Business
Review 51 (March-April 1973): 133-48; Robert E. Quinn and Kim Cameron; Organizational
Life Cycles and Shifting Criteria of Effectiveness, Management Science 29 (1983): 33-51.
 Webers Dimensions of Bureaucracy and
Bases of Organizational Authority

BUREAUCRACY LEGITIMATE BASES

1. 1. Rules and procedures OF AUTHORITY
2. Specialization and
division of labor
1. Rational-legal
3. Hierarchy of authority
4. Technically qualified
personnel 2. Traditional
5. Separate position and
incumbent 3. Charismatic
6. Written communications
and records

Thomson Learning
2004 9-5
Percentage of Personnel Allocated to
Administrative and Support Activities

Line employees

75

Percentage
of 50 Top administrators
Employees
Professional staff
25

0 Clerical
Small Large
Organization Size
Thomson Learning
2004 9-6
 Three Organizational Control
Strategies
TYPE REQUIREMENTS

Rules, standards, hierarchy,

Bureaucratic legitimate authority

Market Prices, competition, exchange

relationship

Clan Tradition, shared values and

beliefs, trust

Source: Based upon William G. Ouchi, A Conceptual Framework Thomson Learning

for the Design of Organizational Control Mechanisms, Management
Science 25 (1979): 833-48. 2004 9-7
Workbook
Activity

Evaluation of Control
On the Job
Your job How your Positives of Negatives of How you would
responsibilities boss controls this control this control improve control

1.

2.

3.

4.

Thomson Learning
2004 9-8
Workbook
Activity

Evaluation of Control
At the University
How Prof. A How Prof. B How these What you think
(small class) (large class) controls is a better
Item controls controls influence you control

1.

2.

3.

4.

Thomson Learning
2004 9-9