To what extent can a parent firm with many branches standardize the activities of its satellites and enforce such uniformity without causing undue strain on the organizational structure? This mathematical study, based on a linear model of the multiple branch organization constructed within a framework of activity analysis, outlines the parameters and postulates three hypotheses in regard to the behavior tendencies of such multibranch organizations.
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References
1.
MarchJ. G.SimonH. A., Organizations (New York, John Wiley, 1958), p. 170.
2.
The term “structure” has a large number of possible connotations. It is generally used in this paper to refer to stable configurations of the various operating parts within a single formal organization. Thus, the structural features of the organization are taken to be constraints on the flows of communication and authority and on the variables used to describe operating relationships. This use of the term is not to be confused with, for example, the Cowles Foundation concept of “economic structure,” which refers to the underlying set of quantitative relations that is to be inferred, by means of maximum likelihood or other estimation techniques, from the set of time series observations on the observable variables of a system.
3.
A structural hypothesis concerning the growth patterns of organizations is presented by HaireMason in “Biological Models and Empirical Histories of the Growth of Organization,” in HaireMason, Ed., Modern Organization Theory (N.Y., Wiley, 1959), pp. 272–306. Haire's approach, however, is very different in focus and intent from that presented here.
4.
Also, the focus of attention in this discussion is restricted to classes of policies and structures of multiple-branch organizations which will fit within the activity-analysis framework. Thus, for example, economics of scale in raising capital or purchasing supplies for the organization as a whole cannot be treated within the standard framework of linear programming.
5.
“Optimal and Feasible Choice in Organizations having Multiple Goals,”Berkeley, Management Science Research Group, Working Paper No. 12, February 1960.
6.
The treatment here builds on a suggestion by SimonH. A., in Models of Man (New York, Wiley, 1957), pp. 250–52, but is a contrast to the approach of Cyert and March in their “Behavioral Theory of Organizational Objectives” in HaireM., Ed., Modern Organization Theory (New York, Wiley, 1959).
