This document outlines the development of classical organization theory from 1776 to the 1930s and neoclassical organization theory from the 1940s to 1950s. It discusses early influential thinkers like Woodrow Wilson, who distinguished between politics and administration in government. Later theorists like Barnard, Selznick, Simon, and Merton challenged assumptions of early theory. Barnard emphasized cooperation over commands and incentives for participation. Selznick viewed organizations as organic and adaptive. Simon criticized "proverbs" of theory and advocated for satisficing. Merton noted potential for bureaucracy to become dysfunctional. Cyert and March framed organizations as coalitions that bargain over objectives.

1. Classical Organization Theory
(1776 – 1930s) Private
Sector
Mostly early 20th century
Public
Public Administration Sector
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Theory at the same time?
Late 1800s but
mostly early 20th century

2. Early Public Administration Theory
Regarding Public Organizations
Modern academic study of
public administration began
in Europe and the US in the
late 1800s.
Woodrow Wilson (1887) distiguished between
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● politics (the will of the state) and
● administration (execution of that will).
Government could be neatly and simply
divided into decision-making and execution.

3. The politics-administration dichotomy
Voters
Representatives
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Administration

4. Early Public Admin. Views…
Influenced by the scientific management
movement.
Administration still an art more than a science,
but ought to try to be more scientific.
Greatly concerned with organization and control:
Division of labor, span of control, organization
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hierarchy, chain of command, reporting systems,
development of standard operating rules.
Control needed to assure both accountability and
efficiency.

5. Classical Organization Theory
(1776 – 1930s)
Mostly early 20th Century
Neoclassical Organization Theory
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Mostly 1940s and 1950s
Extremely influential period!

6. Chester Barnard’s 1937
Functions of the Executive
(Communication & Coöperation)
Barnard emphasized the
importance of strong effective
organizational communications.
But historically he is especially
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famous for emphasizing the need
for coöperation (not commands).
Coöperation obtained by
incentives and persuasion.

7. Bill Adams, FEA, University of Malaya
Negatives
Positives

8. Barnard’s Incentives
Specific General
Inducements Inducement
Material (pay) Customary practices
Nonmaterial Social compatibility
(prestige, power) (attractive assoc.)
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Work setting Social solidarity
(comfortable) (communion)
Personal ideals (pride, Enlarged participation
altruism, values) (having an impact)

9. If short on inducements,
then need “persuasion”:
● Coercion (force)
● Promote “opportunity”
● Promote “motives”
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Personal ideals (pride, Enlarged participation
altruism, values) (having an impact)

10. Notice the change in tone:
Less about structure & commands.
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Next to Selznick who draws heavily on
Barnard’s idea of essential cooperation.

11. Selznick: Organization as an Organism
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No formal organization chart
(abstract rational design) can
fully describe the “organic” whole.

12. Selznick: Organization as an Organism
Organizations develop…
● unwritten laws,
● adaptive mechanisms
for reacting to external environment
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in self-defense for the maintenance
of the system.

13. Selznick: Tactic of “Co-optation”
As one response to
threats, organizations
often employ the tactic
of “co-optation” as a way to
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absorb or adjust to challenges.

14. Notice the change in tone:
Less about structure & commands.
Even bigger shift with Herbert Simon
who blasts prior “principles” as highly
ambiguous and contradictory
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“proverbs” – and says organizational
research needs to be greatly improved!

15. Herbert Simon attacks the “Proverbs”
Unity of • Can conflict with specialization! Who is
the boss of accountant at local school?
Command The local boss or HQ accounting office?
Span of • Can conflict with need to limit layers of
hierarchy! And no clear criteria for the
Control optimum span of five to a dozen.
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Speciali- • But competing bases of specialization:
zation purpose, process, clientele, location?

16. Herbert Simon: Satisficing
“Satisfice” = satisfy + suffice
A decision-making practice of
accepting an adequate outcome,
rather than a “perfect” outcome
(fully optimized).
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“Bounded rationality” = rational
but humans have limits!

17. Merton: Bureaucratic Dysfunction
Devotion to rules
Bureaucracy
becomes the goal
demands reliable
(not an
response & rules
instrument)
Cannot adapt to So the things that
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special conditions help efficiency
not anticipated can cause
by the usual rules dysfunction too
Merton also notes the career pressures to
reinforce the shared strict devotion to rules.

18. Bill Adams, FEA, University of Malaya
Bureaucratic “Pecking Order”

19. Cyert & March
Dilemma in org theory is between
● putting everything into the theory
and making it unmanageable, or
● pruning it to a simple system and
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making it unrealistic!

20. Cyert & March: Coalitions
Organizations may be viewed
as coalitions.
The coalitions bargain about
the organization’s objectives.
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The objectives may be vague!