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Title

Where Lies an Organization’s Purposiveness?

Authors

Name: Nobuo Takahashi

Affiliation: Tokyo University of Science, School of Management

ORCID ID: orcid.org/0000-0002-1718-6310

Corresponding author

Name: Nobuo TAKAHASHI

Full postal address: 1-11-2 Fujimi, Chiyoda-ku, Tokyo, JAPAN

Email address: nobuta@biglobe.jp

Keywords

purposiveness, rationality, Barnard, Simon, March, Thompson, Weick

Authorship Contribution Statement

NT participated in the design of the study, drafted the manuscript and approved the final version.

Competing Interests

The authors declare there are no competing interests.

Acknowledgments

This work was supported by JSPS KAKENHI Grant Number JP19K01857 for FY 2019–2023.

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Where Lies an Organization’s Purposiveness?

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Nobuo TAKAHASHI

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Where Lies an Organization’s Purposiveness? :

From the history of organizational study

Nobuo Takahashia)

Tokyo University of Science, School of Management

Abstract:

What exactly is an organization? To answer this question, we will refer to organizational theory formulated and developed in the 20th century. Chester Barnard believed that human groups appear to be organized rather than disorderly crowds because members with a common purpose are working purposively. Herbert A. Simon, who expanded on this idea, considered that making purposive decisions is rational as long as the purposes are accomplished step by step from top to bottom along a hierarchy of ends. However, he pointed out that this hierarchy of ends was incomplete and was, sometimes, contradictory. Regarding technology as an alternative to this, James D. Thompson came to the opinion that if organizations are purposive, their core should consist of one or more technologies. Karl E. Weick depicted the technology-formation process as an organizing process. People will initially repeat, for their various purposes, an interlocked behavior cycle as a common means. If the cycle is stable, people with differing goals will be able to use it, leading to the assembly of a larger module and a gradual shift to a common purpose.

Keywords:

purposiveness, rationality, Barnard, Simon, March, Thompson, Weick

Introduction

What exactly is an “organization” in organizational theory? To answer this question, we refer to organizational theory formulated and developed in the 20th century. In line with this objective, we list the five major books on organizational theory that will be discussed in this paper, and it can be seen that they appeared at about 10-year intervals.

1. The functions of the executive (Barnard, 1938)

2. Administrative behavior (Simon, 1947)

3. Organizations (March & Simon, 1958)

4. Organizations in action (Thompson, 1967)

5. The social psychology of organizing (2nd ed.) (Weick, 1979)

Chester Barnard (1938) played a leading role in this area. Barnard was an executive and his theories unmistakably formed the foundation for the works of later academic researchers (especially Herbert A. Simon). For example, Barnard noted, “we also imputed to the individual the restricted but important capacity of choice” (Barnard, 1938, p. 38); Simon later referred to the same idea as “bounded rationality” (Takahashi, 2015). Therefore, starting with Barnard, let us follow the view of the organization that was formed and how it evolved over the following half century as the baton passed to other scholars.

Organization is a Purposive System

Barnard called what we see as an organization a coöperative system. A coöperative system has “something” that connects its many concrete elements and subsystems and that makes it appear to function as a single organization as a whole. He called it a formal organization (Barnard, 1938, Chapter 6).

If we consider a group of human beings, it appears to be an organization, not a disorderly crowd, when the members seem to be behaving purposively. Therefore, Barnard thought that a formal organization comes into being “when (1) there are persons able to communicate with each other (2) who are willing to contribute action (3) to accomplish a common purpose” (Barnard, 1938, p. 82).

Barnard made the bold statement that the conditions for establishing a formal organization were communication, a common purpose, and a willingness to serve (Barnard, 1938, Chapter 7). In other words, he asserted that a formal organization clearly differs from a mere group in terms of its common purpose and members’ willingness to serve it.

Barnard went on to say that if such is the case, for a formal organization not to have a fleeting existence but to survive over a longer period of time, it must have effectiveness with respect to its common purpose, as well as efficiency with respect to its members’ willingness to serve. He also proposed that in the short term, either effectiveness or efficiency alone would be sufficient but both would become necessary to survive over a longer period. In other words, he proposed effectiveness and efficiency as conditions for the survival of a formal organization (Barnard, 1938, Chapter 5, Chapter 7).

We could say that Barnard, an executive, identified the function of the executive here, which is to achieve a common purpose by eliciting contributions from a group of people who can communicate with each other and to renew the purpose once one purpose has been achieved. Barnard recognized that the function of the executive is to maintain and sustain the purposive system (Barnard, 1938, Chapter 15).

Organization is a Chain of Decisions

Barnard believed that a purpose to be achieved will determine organizational limits. Influenced by Commons (1934), Barnard stated the following:

if we approach this system or set of circumstances, with a view to the accomplishment of a purpose (and only when we so approach it), the elements or parts become distinguished into two classes: those which if absent or changed would accomplish the desired purpose, provided the others remain unchanged; and these others. The first kind are often called limiting factors, the second, complementary factors. (Barnard, 1938, pp. 202–203)

This idea is also in line with Weick’s (1979) enactment, which was developed later, and Barnard cited the following excerpt from Commons (1934) (Barnard, 1938, p. 204):

But the limiting and complementary factors are continually changing places. What was the limiting factor becomes complementary when once it has come under control; then another factor is the limiting one (Commons, 1934, p. 629).

Barnard refers to the limiting factor as a strategic factor and asserts that “the analysis required for decisions is in effect a search for the ‘strategic factors’” (Barnard, 1938, p. 202). In other words, the strategic factors are searched for one after another, and the necessary decisions appear correspondingly one after another in a chain reaction. Barnard considered the chain of decision-making that occurs when these strategic factors are replaced one after another.

In contrast, Simon’s chain of decisions has a slightly different nuance. For Simon, decision-making was problem solving, and being in a specific position in an organization means receiving a specific communication. Thus, Simon (1957, p. xvii) thought that, for example, sales managers are given typical sales managers’ “problems,” which had been called psychological factors (Barnard, 1938, Chapter 4) or were later called definitions of the situations (March & Simon, 1958, Chapter 6).

In this way, the problem has a correct answer, and if the problem is the same, no matter who solved it, the correct answer should be the same. Here Simon renamed what Barnard (1938, p. 188) called a subsidiary decision as a decision premise and defined decision-making as a process of “drawing conclusions from premises” (Simon, 1976, p. xii). Barnard’s chain of decisions morphed into Simon’s communication network for transmitting decision premises.

This image was further bolstered by March and Simon (1958). Almost from the beginning, they assert, “if we wished to sum up in a single quality the distinctive characteristics of influence processes in organizations, as contrasted with many other influence processes of our society, we would point to the specificity of the former as contrasted with the diffuseness of the latter” (March & Simon, 1958, pp. 2–3). Here, specificity means not just specificity of channels but also specificity of content. In other words, unlike the process of rumor spreading, organizations transmit content to certain recipients using only a few clear channels. Moreover, they can also transmit this content using a common jargon that is akin to a code, and since they know a lot about the recipients, they are better able to predict how the recipients will react (March and Simon, 1958, Chapter 1).

Purposiveness is Transformed into Rationality in Each Decision

Therefore, it can be said that Simon’s decision-making chain/network is a refinement of communication among Barnard’s three conditions for establishing a formal organization (communication, common purpose, and willingness to serve). So how did Simon treat the other two conditions? He combined willingness to serve with efficiency, which is one of the two conditions for the survival of a formal organization (effectiveness and efficiency) and sublimated its status to that of organizational equilibrium.

Then, he combined common purpose with effectiveness. First, how is purposiveness maintained in each decision? Simon held that in the hierarchy of ends in corresponding to means–ends chains, “each level to be considered as an end relative to the levels below it and as a means relative to the levels above it” (Simon, 1947, p. 63), explaining that it is purposive to accomplish purposes step by step from top to bottom along a hierarchy of ends (Simon, 1947, Chapter 1).

As Simon states, “it is a purely factual question whether the measures he takes in order to accomplish his aim are appropriate measures” (Simon, 1947, p. 48), and “it can be determined whether they are correct, given the objective at which they are aimed” (Simon, 1947, p. 49). Therefore, if instead of a “measure,” we use the concept of game theory “strategy” by von Neumann and Morganstern (1944), then

The task of decision-making involves three steps: (1) the listing of all the alternative strategies; (2) the determination of all the consequences that follow upon each of these strategies; and (3) the comparative evaluation of these sets of consequences. The word “all” is used advisedly (Simon, 1947, p. 67).

Simon defined this as objective rationality.

Thus, purposiveness, which Barnard considered the source of organization-ness, was transformed into rationality in each decision in Simon’s decision-making chain/network. In making each decision, people need to follow the rationality transformed from purposiveness.

He then points out that it is impossible for people to know all alternatives and all their outcomes, and this impossibility is a particularly important deviation from the model of objective rationality in actual behavior. In other words, by denying (1), (2), and (3) for being far from it in real behavior, he hints at “bounded rationality” (Simon, 1947, Chapter 5).

However, as Simon acknowledges, this argument is fragile because for this hierarchy of ends, “instead of a single branching hierarchy, the structure of conscious motives is usually a tangled web or, more precisely, a disconnected collection of elements only weakly and incompletely tied together” (Simon, 1947, p. 63). “Nevertheless, what remains of rationality in their behavior is precisely the incomplete, and sometimes inconsistent, hierarchy that has just been described” (Simon, 1947, p. 64).

The Purposive Organization Has Technical Cores

Instrumental action is rooted, on the one hand, in desired outcomes and, on the other hand, in beliefs about cause/effect relationships. Given a desire, the state of man’s knowledge at any point in time dictates the kinds of variables required and the manner of their manipulation to bring that desire to fruition (Thompson, 1967, p.14).

Thompson came up with core technology as an alternative to this fragile hierarchy of ends. While Simon discussed rationality using economic criteria, Thompson discussed it using instrumental criteria as well (Thompson, 1967, p. 14).

Thompson considered the organization to be an open system, assuming something like homeostasis (the state and function of purposively maintaining a certain range of body temperature, blood, etc.). At the same time, however, like Simon, he also believed that the behavior of the people within the organization follows the criteria of rationality. In other words, “an open system subject to criteria of rationality” (Thompson, 1967, p. 11) is Thompson’s view of organization. He also thought that “planned action, not random behavior, supports our daily lives” (Thompson, 1967, p. 8) and that organizations’ “actions are expected to be reasonable or rational” (Thompson, 1967, p. 1).

So in which situations can we observe a planned, reasonable, rational action that is not random? First, he says,

Instrumental action is rooted on the one hand in desired outcomes and on the other hand in beliefs about cause/effect relationships. Given a desire, the state of man’s knowledge at any point in time dictates the kinds of variables required and the manner of their manipulation to bring that desire to fruition (Thompson, 1967, p. 14).

This is where technology, or technical rationality, exists. “Technical rationality can be evaluated by two criteria: instrumental and economic” (Thompson, 1967, p. 14). Here, if we replace “desires outcomes” and “a desire” with “purpose” in the quoted text, we will find that Thompson was thinking of a variable equivalent to Barnard’s limiting factor or strategic factor.

Also, he thought that within such technology, “complex organizations are built to operate technologies that are found to be impossible or impractical for individuals to operate” (Thompson, 1967, p. 15). It, thus, follows that “one or more technologies constitute the core of all purposive organizations” (Thompson, 1967, p. 19). Thompson thought that at the technical level, at the core of an open system subject to criteria of rationality, there are core technologies that are closed systems, where uncertainty is removed as much as possible and where technical rationality should be pursued.

Shift to Common Purpose through Assembling Cycles

So, how was this technology formed? Weick begins with “either by design or by accident, numerous interlocked behavior cycles form within organizations” (Weick, 1979, p. 112). What is key here is that it is not necessary to converge on a common purpose from the beginning. First of all, multiple people will repeat interlocked behavior as a common means, resulting in the formation of numerous stable interlocked behavior cycles. In fact, for someone engaged in a single interlocked behavior, it is not always necessary to share a common purpose.

However, once a stable interlocked behavior cycle has been formed, it becomes available to people with different purposes. This makes it possible to use the cycles to assemble them into a larger module. An example of this phenomenon is the anecdote about the three stonecutters who were asked what they were doing:

The first says, “I am cutting stone.” The second says, “I am shaping a cornerstone.” But the third answers, “I am building a cathedral.” (Deal & Kennedy, 1982, p. 41)

The interlocked behavior cycle of “cutting stone” can be used for diverse purposes. In this case, it is being used for the purpose of making the cornerstone of a building. By combining it with the other interlocked behavior cycles, people finally achieve the common purpose of building a cathedral. When this happens, we realize that a shift from diverse purposes to a common purpose has occurred (Weick, 1979, Chapter 4).

Once the members converge on interlocked behaviors as the means to pursue diverse ends, there occurs a subtle shift away from diverse to common ends. The diverse ends remain, but they become subordinated to an emerging set of shared ends (Weick, 1979, p. 92).

This is what Weick considers as organizing.

Retrospective Rationality in Organization

Thus, both Simon’s rationality, which was transformed from purposiveness, and the purpose itself are actually created after the fact. Simon also seems to have noticed this. Let us confirm this based on Takahashi (2012, pp. 163–166).

For instance, even in an organization’s hierarchical structure, the lower one goes, the more the decisions will be made in line with the following principle of efficiency.

A fundamental principle of administration, which follows almost immediately from the rational character of “good” administration, is that among several alternatives involving the same expenditure, the one that leads to the greatest accomplishment of administrative objectives should always be selected; among several alternatives that lead to the same accomplishment, the one that involves the least expenditure should be selected (Simon, 1947, pp. 38–39).

In other words, Simon was thinking of rationality in terms of economic criteria. However, in an actual living organization, it is impossible to apply the principle of efficiency to decision-making. In fact, “Chapter IX. The criterion of efficiency” in Simon’s (1947) work states, “the criterion of efficiency is most easily understood in its application to commercial organizations that are largely guided by the profit objective” (Simon, 1947, pp. 172–173), so its application is left to for-profit organizations because it is easy. He was emphasizing the difficulty of measuring the results in non-profit organizations, especially public organizations.

However, 50 years later, in the fourth edition of his book, in 1997, Simon added a “Commentary on Chapter IX,” which states, “Chapter IX places considerable emphasis upon the difficulty of measuring results in public organizations and argues that it is easier to do so in business organizations” (Simon, 1997, p. 272) and then goes on to list the difficulties of measuring results even in for-profit organizations. Taking this list of difficulties backward, in short, the principle of efficiency cannot be employed unless things can be broken down into very short-term, infinitely independent decision problems.

So then, is the principle of efficiency generally meaningless? Actually, the principle of efficiency has an actual use. The principle of efficiency is not actually used prior to making a decision; it is used after a decision is made. Looking at existing organizations, the definition used when justifying or rationalizing a decision after the fact is actually that of the principle of efficiency. Such statements as “it’s cheaper to do it this way” or “performance is better this way” actually provide more easily understandable reasoning. Simon added the following.

Actually, the “principle” of efficiency should be considered a definition rather than a principle: it is a definition of what is meant by “good” or “correct” administrative behavior (Simon, 1947, p. 39).

In fact, it is neither more nor less.

Why Do We Need a Conference?

This is why a conference is needed. Textbooks on decision theory make plausible statements such as choosing the best option from multiple alternatives, but such cases are actually quite rare when real firms or organizations make decisions (Takahashi, 2010, p. 57). Let me explain this based on Takahashi (2012, pp. 166–167).

In truth, for most decisions, if even one good alternative is found, at that point, a conference, meeting, or the like is scheduled, and during the time period prior to the meeting, the presenters prepare alternative proposals for comparison. Why is this done? The reason is simple. When making decisions at meetings, it is necessary to follow a procedure or rationalizing process so that everyone can confirm that the best decision was made after comparing several alternatives so that everyone will be on board with the reason for choosing that decision. At such a time, the principle of efficiency goes to work to make sure that this decision is the best.

Therefore, in a company with a one-man president, who behaves as he pleases without regard for the opinions of others, it is not necessary usually to go through such a wasteful procedure. It’s enough for the president to just say, “Okay,” and that’s the final word. One or two alternatives are sufficient. In fact, survey data have indicated that at Japanese firms, there is a connection between this way of making decisions and the number of alternatives presented (Takahashi & Takayanagi, 1985).

In short, rational decisions and rational behavior are explained after the fact or are justified in retrospect. Preparing several alternatives that are clearly inferior even if done ex-post-facto is an important procedure when considering persuadability and accountability.

Conclusion

What is an organization? As we have seen, the answer to this question can be organized around common purpose and purposiveness. Simon thought that a purposive organization with a common purpose, as Barnard thought, should have an economic rationality based on a hierarchy of ends with the common purpose at the top, even though it is fragile. In contrast, Thompson thought that if it is a purposive organization, there must be technology, or technical rationality, at the core of the organization. However, people do not have a common purpose from the beginning. According to Weick, once a stable interlocked behavior cycle is established, people with varying purposes can use it, and this enables the assembly of a larger module. The result is a shift toward a common purpose.

Acknowledgments

This work was supported by JSPS KAKENHI Grant Number JP19K01857 for FY 2019–2023.

References

Barnard, C. I. (1938). The functions of the executive. Cambridge, MA: Harvard University Press.

Chandler, A. D., Jr. (1962). Strategy and structure: Chapters in the history of the American industrial enterprise. Cambridge, MA: MIT Press.

Commons, J. R. (1934). Institutional economics: Its place in political economy. New York, NY: Macmillan.

Deal, T. E., & Kennedy, A. A. (1982). Corporate cultures: The rites and rituals of corporate life. Reading, MA: Addison-Wesley.

March, J. G., & Simon, H. A. (1958/1993). Organizations. (1st ed.). New York, NY: John Wiley & Sons; (2nd ed.). Cambridge, MA: Blackwell.

Simon, H. A. (1947/1957/1976/1997). Administrative behavior: A study of decision-making processes in administrative organization (1st/2nd eds.). New York, NY: Macmillan. (3rd/4th eds.). New York, NY: Free Press.

Takahashi, N. (2010). Soshikiryoku [Organizational capability]. Tokyo, Japan: Chikuma Shobo (in Japanese).

Takahashi, N. (2012). Kara: (7) Sensumeikingu [Shell: (7) Sensemaking]. Akamon Management Review, 11(3), 145–172 (in Japanese). doi: 10.14955/amr.110301

Takahashi, N. (2015). Where is bounded rationality from? Annals of Business Administrative Science, 14, 67–82. doi: 10.7880/abas.14.67

Takahashi, N. (2016). Strategy and structure follow technology: A spinout proposition of J. D. Thompson’s Organizations in Action. Annals of Business Administrative Science, 15, 15–27. doi: 10.7880/abas.0150810a

Takahashi, N., & Takayanagi, S. (1985). Decision procedure models and empirical research: The Japanese experience. Human Relations, 38(8), 767–780.

Thompson, J. D. (1967/2003). Organizations in action: Social science bases of administrative theory. New York, NY: McGraw-Hill. New Brunswick, NJ: Transaction.

Velupillai, K. V. (2018). Models of Simon. London, UK: Routledge.

von Neumann, J., & Morgenstern, O. (1944). Theory of games and economic behavior. Princeton, NJ: Princeton University Press.

Weick, K. E. (1969/1979). The social psychology of organizing. (1st/2nd eds.). Reading, MA: Addison-Wesley.

a) Tokyo University of Science, School of Management, 1-11-2 Fujimi, Chiyoda-ku, Tokyo, JAPAN, nobuta@biglobe.jp

The author declares there are no competing interests.

© 2024 Nobuo Takahashi. This is an Open Access article distributed under the terms of the Creative Commons Attribution License CC BY 4.0 (Attribution 4.0 International) license. The CC BY 4.0 license permits unrestricted reuse, distribution, and reproduction in any medium, provided the original work is properly cited.

Although the second edition retains some of the same text as the first edition (1969), most of the content was rewritten. In terms of volume as well, the second edition is 23.5 cm × 16 cm × 264 pages (excluding the references) compared with the first edition’s 21 cm × 14 cm × 109 pages. In short, the book expanded about threefold.

Some scholars such as Velupillai (2018, p. 115), however, disagree with Takahashi’s (2015) assertions.

As pointed out in Takahashi (2015), “bounded rationality” does not appear at all in Simon’s (1947) work.

Thompson (1967) discussed a multidivisional type of organization from the standpoint of organizational rationality embedded with this core technology. Chandler (1962) advocated that “structure follows strategy” after analyzing the history of management to see how this multidivisional types came into being, but perhaps what Thompson wanted to say was that for the time being, “strategy and structure follow technology” (Takahashi, 2016).