Organizational Theory, Structure, Change, and Culture in Health Care

Topics: Culture, Organizational Change, Organizational Structure, Organizational Theory Words: 831 Pages: 3

Overall, the critical task of organizational theory is to provide the managerial personnel with a set of models, strategies, and methods on how to effectively organize the internal structure of a company, fix the existing problems, and manage them more effectively. In health care, organizational theory is used by the executives of hospitals and other health care organizations to improve their functioning and the quality of services provided to the patients.

	Theories	Definition	Pros	Cons
1	Structural Contingency	There is no universal structure that will be equally beneficial for each organization because the optimal structure is determined by the unique environment of an organization (Mick and Shay, 2014)	1. It encourages managers to be flexible 2. It emphasizes the role of management in finding and keeping the most suitable organizational form (Mick and Shay, 2014)	1. Excessively complex 2. Lacks precise recommendations on how to structure an organization in various situations
2	Resource Dependence	An organization acquires resources from the environment where it operates. These recourses, in turn, shape the structure of an organization (Mick and Shay, 2014)	1. It encourages managers to develop alternative business plans to avoid losses 2. It emphasizes the significance of employee retention	It ignores “power structures which are not only related to objective resources” (Nienhuser, 2008, p. 27)
3	Institutional	An organizational structure is strongly affected by “beliefs, norms, and manners of thinking” (Mick and Shay, 2014, p. 32)	It explains how the organizational practices appeared from and influenced by the institutional pressures (Mick and Shay, 2014)	It constrains managerial strategies with the adherence to rules and norms
4	Population Ecology	According to this theory, “birth, rise, and failure of populations of similar organizations” is determined by natural selection (Mick and Shay, 2014, p. 37)	It explains why some companies go bankrupt (for example, small private physician practices in primary care) and other survive	It is strongly affected by the concepts of confrontational social Darwinism and, hence, does not “consider the numerous ways in which organizations engage in cooperative, consensual, and mutual relationships” (Mick and Shay, 2014, p. 41)
5	Principal-Agent	One party might be interested in acting in advantage of another party (Mick and Shay, 2014)	It explains how a principal could force an agent to act in principal’s interests	It does not provide a clear strategy on how to behave in situation when principals constantly change (Gauld, 2018)
6	Transaction Cost Economics (TCE)	This theory predicts the emergence of the transaction on markets	1. TCE reduces the uncertainty of the environment 2. TCE assists to analyze decisions on deintegration and integration (Mick and Shay, 2014)	1. It is too narrow and ignores the problem of “transaction costs transaction costs inside the organization” (Mick and Shay, 2014, p. 45) 2. It assumes that human behavior is not prone to change (Mick and Shay, 2014)
7	Social Network	The theory analyzes how units in organizations are interrelated with the outcomes (Mick and Shay, 2014)	1. It shows that even minor changes might affect the entire organization 2. It could be used to explain and prevent high employees turnover	The interpretation of relations between units an of organization and its performance might be subjective
8	Complexity	This theory examines links between units of organizations, the collective behaviors of a system, and organizations environment (Mick and Shay, 2014)	1. It views organizations as dynamic and complex entities 2. It is flexible in responding “to the rapidly changing context of health services implementation” (Long, McDermott, and Meadows, 2018, p. 1)	It prevents from development of long-term plans

Every theory of organizations has its strong and weak sides. From this, it could be inferred that it is impossible to use only one specific approach to govern any company efficiently. As Dixit and Sambasivan (2020) put it, the integrated implementation of several theories strongly positively affects a company’s outcomes and its design and structure. In their study, Dixit and Sambasivan (2020) discuss such theories as Resource Dependence Theory, Institutional Theory, Population Ecology Theory, and Transaction Cost Economics. However, the choice of the theories should not be limited to these four ones. Instead, the choice should be made according to the needs and peculiarities of every single healthcare center or organization.

A private hospital is a commercial organization because patients pay for the services. Hence, the administration should refer to the Transaction Cost Economics to calculate such transaction costs as, for example, costs for management and advertisement. At the same time, the managerial personnel should not forget to pay attention to the doctors, nurses, and other employees who work in this hospital. This way, the administration could use insights provided by the Social Network Theory and Agency Theory to establish efficient relations with the subordinates and keep them motivated to work hard. It is also necessary to consider Institutional Theory because it helps to understand how to meet the target audience’s expectations. This brief example demonstrates that every theory is essential despite its disadvantages and, hence, effective managers should apply several theories instead of a single one.

References

Dixit, S. K., & Sambasivan, M. (2020). An Integrated Multitheoretical Perspective of Public Healthcare Services Delivery Organizations. Public Organization Review, 20(2), 319-335.

Gauld R. (2018) Principal-Agent Theory of Organizations. In: Farazmand A. (eds) Global Encyclopedia of Public Administration, Public Policy, and Governance (pp. 4914 – 4918). Springer.

Long, K. M., McDermott, F., & Meadows, G. N. (2018). Being pragmatic about healthcare complexity: our experiences applying complexity theory and pragmatism to health services research. BMC medicine, 16(1), 1-9.

Mick, S. S. F., & Shay, P. D. (2014). A primer of organization theories in health care. In S. S. F. Mick & P. D. Shay (Eds.), Advances in health care organization theory (2^nd ed., pp. 25 – 51). John Wiley & Sons.

Nienhuser, W. (2008). Resource dependence theory-How well does explain the behavior of organizations? Management Revue, 19(1), 9-32.