Introduction to the filed of Organizational behavioral - summary of chapter 1 of Organizational Behavior by Mcshane, S. (8th edition)

Organizational Behavior
Chapter 1
Introduction to the filed of Organizational behavioral

The field of organizational behavior

Organizational behavior (OB): the study of what people think, feel, and do in and around organizations.
They study this topic at multiple levels of analysis:

  • The individual
  • The team
  • The organization

Organizations: groups of people who work interdependently toward some purpose.
Collective entities. Humans who interact with each other in an organized way.

Requires some minimal level of:

  • Communication
  • Coordination
  • Collaboration

Members have a collective sense of purpose. This purpose isn’t always well defined and agreed on.

Historical foundation s of organizational behavior

OB emerged as a distinct field throughout the 1940s.
During that decade, a few researchers began describing their research as organizational.

Experts on other fields have been studying organizations for many centuries.

Why study organizational behavior?

Comprehend and predict workplace events

The field of organizational behavior uses scientific research to discover systematic relationships, which give us a valuable foundation for comprehending organizational life.
It helps us predict and anticipate future events so we can get along with others, achieve our goals, and minimize unnecessary career risks.

Adopt more accurate personal theories

Influence organizational events

Contemporary developments facing organizations

Organizations are deeply affected by the external environment. They need to maintain a good organization-environment fit by anticipating and adjusting to changes in society.

Technological change

Technological change has always been a disruptive force in organizations, as well as in society.
Innovations dramatically boost productivity, but also usually displace employees and render obsolete entire occupational groups.

Not even top-level executives are immune to the effects of these transformational innovations.

Other technologies potentially improve productivity but more profoundly alter our relationships and patterns of behavior with coworkers, clients, and suppliers.

Other technologies aim to improve health and well-being.

Information technology is one of the most significant forms of technological change in recent times.
Some OB experts argue that information technology gives employees a stronger voice through direct communication with executives and broader distribution of their opinions to coworkers and beyond.

It also created challenges.

  • Tethering people to their jobs for longer hours
  • Reducing their attention spans at work
  • Increasing techno-stress

At a macro level, information technology has reconfigured entire organizations by integrating suppliers and other external entities into the transformation process.

Eventually, technology may render organizations less of a place where people work and more of a process or network where people collaborate across space and time.


Economic, social and cultural connectivity with people in other parts of the world.
Organizations globalize when they actively participate in other countries and cultures.

The degree of globalization today is unprecedented because information technology and transportation systems allow a much more intense level of connectivity and interdependence around the planet.


  • Lower costs
  • Greater access to knowledge and innovations

There is debate about whether globalization benefits developing nations and the extent to which it is responsible for increasing work intersification, reduced job security, and poor work-life balance in developing countries.

OB focuses on the effects of globalization on organizations and how to lead and work effectively in this emerging reality.

Emerging employment relationships

Technology, globalization, and several other developments have substantially altered the employment relationship in most countries.

  • We are more likely to work on a 24/7 schedual.

One of the most important employment issues over the past decade has been work-life balance.
Work-life balance occurs when people are able to minimize conflict between their work and nonwork demands.

Most employees lack this balance.

Another trend is for employees to work away from the organization’s traditional common work site.


An arrangement whereby, supported by information technology, employees work from home one or more work days per month rather than commute to the office.


  • Telecommuters usually experience better work-life balance because they have more time and somewhat more control to juggle work with family obligations.
    Work-life balance is less likely to improve when telecommuters lack sufficient workspace and privacy at home and have increased family responsibilities in telecommuting days.
  • Attractive for younger job applicants, and turnover is usually lower among telecommuting employees
  • Higher productivity
  • Reduce greenhouse gas emissions and office expenses


  • More social isolation, including weaker relationships with coworkers
  • Receive less word-of-mouth information, which may have implications for promotional opportunities and workplace relations
  • Lower team cohesion and a weaker organizational structure

Success depends on several characteristics of the employee, the job, and organization.

  • Employees who work effectively from home typically have higher self-motivation, self-organization, need for autonomy and information technology skills.
    Those who telecommute most of the time also fulfill their social needs more from sources outside the workplace.
    Jobs are better suited to telecommuting when the tasks do not require
  • Resources at the workplace
  • The work is performed independently from coworkers
  • Task performance is measurable

Creating workforce diversity

Surface-level diversity: the observable demographic or physiological differences in people.

Deeper-level diversity: differences in the psychological characteristics of employees, including personalities, beliefs, values and attitudes.

Consequences of diversity

Teams with high informational diversity (members have different knowledge and skills):

  • More creative
  • Make better decisions in complex situations
  • Surface and deeper diversity:
  • More representative of most communities
  • Companies are better able to recognize and address community needs


  • Employees with diverse backgrounds usually take longer to perform effectively together
  • Some forms of diversity increases the risk of dysfunctional conflict

Anchors of organizational behavior knowledge

The systematic research anchor

A key feature of OB knowledge is that is should be based on systematic research, which typically involves forming research questions, systematically collecting data, and testing hypotheses against those data.

Evidence-based management: the practice of making decisions and taking actions based on research evidence.

Why don’t decision makers consistently apply evidence-based management?

  • They are bombarded with ideas from consultant reports, popular business books, newspaper articles, and other sources, which makes it difficult to figure out which ones are based on good evidence.
  • Good OB research is necessarily generic. Managers have a difficult task of figuring out which theories are relevant to their unique situation.
  • The sources of popular management fads that lack evidence are rewarded for marketing their ideas, not for testing to see if they work.
  • Human beings are affected by several perceptual errors and decision-making biases

Suggestions to create a more evidence-based organization:

  • Be skeptical of hype
  • The company must embrace collective expertise rather than rely on charismatic stars and management gurus.
  • Stories provide useful illustrations and possibly preliminary evidence of a useful practice, but they should never become the main foundation to support management action.
  • Take a neutral stance toward popular trends and ideologies

The multidisciplinary anchor

The field should welcome theories and knowledge from other disciplines, not just form its own isolated research base.

The contingency anchor

The effect of one variable on another variable often depends on the characteristics of the situation of people involved.
A single solution or outcome rarely exists. A particular action may have different consequences under different conditions.

The multiple levels of analysis anchor

What goes on in organizations can be placed into three levels of analysis

  • Individual
  • Team
  • Organization

Perspectives of organizational effectiveness

Organizational effectiveness: a broad concept represented by several perspectives, including the organization's fit with the external environment, internal subsystems configuration for high performance, emphasis on organizational learning, and ability to satisfy the needs of key stakeholders.

The best yardstick of organizational effectiveness is a composite of four perspectives:

  • Open systems
  • Organizational learning
  • High-performance work practices
  • Stakeholders

Open systems

A perspective that holds that organizations depend on the external environment for resources, affect that environment through output, and consists of internal subsystems that transform inputs to outputs.

As open systems, organizations depend on the external environment for resources.
The external environment also consists of rules and expectations that place demands on how organizations should operate.

Some environmental resources are transformed into output that are exported to the external environment, whereas other resources become subsystems in the transformation process.

Inside the organization are numerous subsystems.
These subsystems are dependent on each other as they transform inputs to outputs.

Some outputs may be valued by the environment, other outputs are undesirable by-products.
Throughout he process, organizations receive feedback form the external environment regarding the value of their outputs, the availability of future inputs, and the appropriateness of the transformation process.

Organization-environment fit

Organizations are effective when they maintain a good ‘fit’ with their external environment.
Good fits exists when the organization’s inputs, processes and outputs are aligned with the resources available in the external environment as well as with the needs and expectations of that environment.

Organizations maintain a good environmental fit in three ways:

  • Adapt to the environment
  • Influence the environment
  • Move to a more favorable environment

Effective transformation process

  • The most common indicator of effective internal subsystems is their efficiency.
    Efficient organizations produce more goods or services with less labor, materials and energy.
  • Adaptability
    Organizations need to adapt to their external environment, this usually includes a transformation process that adapts to new products and sometimes new ways of making those products.
  • Innovativeness

An important feature of an effective transformation process is how well the internal subsystems coordinate with each other.

Organization learning perspective

A perspective that holds that organizational effectiveness depends on the organization’s capacity to acquire, share, use, and store valuable knowledge.

Intellectual capital: a company’s stock of knowledge, including:

  • Human capital
    The stock of knowledge, skills, and abilities among employees that provide economic value to the organization.
  • Structural capital
    Knowledge embedded in an organization’s system and structures
  • Relationship capital
    The value derived from an organization’s relationships with customers, suppliers, and others.

An organization’s intellectual capital develops and is maintained through:

  • Aquiring knowledge
    Bringing in knowledge from the external environment as well as through discovery.
  • Sharing knowledge
    Distributing knowledge throughout the organization.
  • Using knowledge
    A competitive advantage only when it is applied to improve organizational processes.
  • Storing knowledge
    The process of retaining knowledge, which is known as organizational memory.

High-performance work practices perspective

High-performance work practices (HPWPs): a perspective that holds that effective organizations incorporate several workplace practices that leverage the potential of human capital.

Employee involvement and autonomy strengthen employee motivation, improve decision making, accelerate organizational responsiveness, and increase employee commitment to change.

High-performance work practices improves an organization’s effectiveness in three ways:

  • These activities develop employee skills and knowledge, this improves individual behavior and performance
  • They tend to adapt better to rapidly changing environments
  • Strengthen employee motivation and positive attitudes toward the employer.

Stakeholder perspective

Stakeholders: individuals, groups, and other entities that affect, or are affected by, the organization’s objectives and actions.
Stakeholder relations are dynamically. They can be negotiated an influenced.

Organizations are more effective when they understand, manage, and satisfy stakeholder needs and expectations.
There are many types of stakeholders, and they are continuously evolving.
Understanding, managing, and satisfying the interests of stakeholders is challenging because they have conflicting interests and organizations lack sufficient resources to satisfy everyone. Organizational leaders need to decide how much priority to give to each group.

Values, ethics, and corporate social responsibility

Values: relatively stable, evaluative beliefs that guide a person’s preferences for outcomes or courses of action in a variety of situations.

The stakeholders perspective provides valuable details about features of the external environment that are missing form the open system perspective.
It incorporates values, ethics, and social responsibility into the organizational effectiveness equation.

Corporate social responsibility (CSR): organizational activities intended to benefit society and the environment beyond the firm’s immediate financial interest or legal obligations.
Companies have a contract with society, in which they must serve stakeholders beyond stockholders and customers.

Connecting the dots: an integrative model of organizational behavior

The four perspectives of organizational behavior:

  • Open systems
  • Organizational learning
  • High-performance work practices
  • Stakeholders

Organizational effectiveness is the ultimate dependent variable in organizational behavior.

Individual inputs and processes influence individual outcomes, which in turn have a direct effect on the organization’s effectiveness.

Connect & Continue
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Organizational Behavior by Mcshane, S. (8th edition) a summary


This is a summary of the book Organizational Behavior by Mcshane, S (8th edition). This book is about psychology at the workplace. It contains for instance ways to increase employee satisfaction and workplace dynamics. The book is used in the course 'Labor and and

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