Organizations and theories that define or explain human behavior within organizations have been the focus of research studies in fields including sociology, business, and human resource development. Common methods and theories that have been derived include organization theory, institutional theory, organizational development and organizational design.
Organization and Institutional Theory
Barnard (1938) originated organization theory. He defined organization as “Formal organization is that kind of cooperation among men [sic] that is conscious, deliberate, [and] purposeful” (p.4). He suggested that the organizational system could make up for the limitations of the cognitive ability of men. One area of organizational theory that is essential to this chapter is the organization-environment relationship (Tushman & Anderson, 1986). Hinings and Greenwood (2002) trace the history of organization theory, from its roots which began with Weber (1964), as a discipline in sociology to its migration in business.
Selznick (1949) expanded Barnard’s work and introduced institutional theory. Selznick’s work suggested to leaders that they needed to define and defend organizational distinctive character. His view also led to strategic decision-making and the creation of organizational cultures (Scott, 1987).
Institutional theory concentrates on social structure. It examines the processes by which structures, including schemas, rules, norms, and routines, become reliable guidelines for social behavior. It inquires how these elements are created, diffused, adopted, and adapted over space and time; and how they fall into decline and disuse (Scott, 2004). Scott (1987) describes institutionalization as
“the social process by which individuals come to accept a shared definition of reality – a conception whose validity is seen as independent of the actor’s own views or actions but is taken for granted as defining the ‘way things are’ and/or the ‘way things are to be done.’” (p. 496)
Perhaps this definition of institutionalization best illustrates the link between HRD and Institutional Theory. HRD, through the lens of institutional theory, becomes the operational arm by which the “shared definition of reality” is propagated throughout the organization.
Why the organization exists must be known by the individuals who are expected to execute its strategy. Historically, organizations did not have to worry about this because the people who worked there were not required to think. They were just expected to act or behave the way management required. They did so to keep their job and obtain a pay check. To be competitive today, especially in developed countries, organizations have to deal with employees who are engaged in their career. Drucker (1999) referred to them as knowledge workers.