Closed And Open Organizational Systems Research Paper

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Closed and open systems refer to whether organizational entities, such as groups and/organizations, are viewed as relatively closed or open to their environment. Such a perspective has a profound influence on how organizations are described and studied. When treated as closed systems, organizations are unaffected by their environment, and attention is directed inward to internal structures and behaviors. As open systems, organizations are interdependent with their environment, and focus is outward to how such interaction is managed.

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Knowledge of closed and open systems derives from the broad framework of general systems theory (GST) which seeks to explain the structure and behavior of complex wholes called systems (e.g., von Bertalanffy 1956, Miller 1978). This broad metatheory is based on related research from the physical, biological, and social sciences, and seeks to discover general laws which apply to all levels of systems from single cells to societies.

This research paper shows how GST applies to organizations. It describes the systemic properties of organizations as closed and open systems, and explains how they are structured and managed.

1. Organizations As Systems

Organizational scholars use GST to describe the general properties of organizational systems. This includes defining their constituent parts and how they are inter related to form a system. It also involves identifying different levels of organizational systems and explaining how they interact with each other.

1.1 Organizational Parts, Relationships, And Wholes

A key premise of GST has to do with the definition of a system and how it forms an organized whole. A system is composed of parts and relationships among them. The system provides the framework or organizing principle for structuring the parts and relationships into an organized whole. This makes systems capable of behaving in ways that are greater than merely the sum of the behaviors of their parts, thus leading to the common adage: ‘the whole is greater than the sum of its parts.’ Organizational scholars have expended considerable effort in identifying the constituent members or subunits of organizational systems and examining relationships among them. They have sought to discover the organizing principals through which the parts are arranged into a coherent whole. For example, job design researchers have identified different elements of jobs; they have shown how they can be combined to affect employee motivation. Group dynamics scholars have spent considerable time ad-dressing issues of group membership and member interaction. They have discovered different ways of structuring groups to perform tasks that members could not do working alone. They have shown how, under certain conditions, groups can outperform individuals, thus leading to various high-performing group designs, such as self-managing teams, quality circles, and cross-functional teams. Similarly, organization theorists have identified the different components of organizations and examined relations among them. They have found different ways to organize the components and relationships for competitive ad-vantage.

1.2 Levels Of Organizational Systems

A second principle of GST has to do with the multilevel nature of systems. Systems exist at different levels; the levels exhibit a hierarchical ordering, with a higher level of system being composed of systems at lower levels. For example, societies are composed of organizations; organizations are composed of groups; groups are composed of individuals; and so on. Higher-level systems provide constraints and opportunities for how a system organizes its parts, and the nature of those parts affects the system’s organizing possibilities. Thus, to describe a system at a particular level and explain its behavior, it is necessary to look both upward to the higher level system within which it is embedded and downward to its constituent parts.

This multilevel perspective has led scholars to identify different levels of organizational systems, and to focus on understanding them and how they interact with each other. Considerable attention has been directed at specifying appropriate levels of analysis, both for conceptualizing about organizational systems and for aggregating and disaggregating data that apply to different levels. For example, scholars have developed analytical guides for aggregating data from individuals to devise measures of group and/organization functioning. As researchers have developed more comprehensive theories and more powerful analytical methods, they have made finer distinctions among levels of organizational systems, particularly above the organization level. This has led to at least five levels of organizational systems:

(a) individual member, role, or job;

(b) group;

(c) organization;

(d) population of organizations and/or alliance among organizations; and

(e) community of populations and/or community of alliances.

2. Organizations As Closed Systems

Closed systems do not interact with the environment, and consequently their behavior depends largely on the internal dynamics of their parts. They seek to maintain a steady state or equilibrium among their parts while performing goal-directed behaviors. Be-cause the environment is inconsequential for goal achievement, system behavior is highly specified and maximally controlled within the system.

Until the late 1960s, organizational scholars tended to employ a closed-system perspective for studying organizations. Organizational environments were seen as relatively simple and predictable, and thus were not problematic or significant for how organizations behaved. Attention was directed at the internal dy-namics of groups and/organizations, particularly at how member behavior was controlled to achieve specific objectives and goals. This led to extensive knowledge of organizational control mechanisms and search for the best way to structure organizational systems. For example, at the individual level, job design researchers discovered how to analyze and maximally specify the most efficient way to perform various tasks. At the group level, researchers showed how group structures and processes could contribute to member conformity to group norms. At the organization level, scholars studied a variety of devices for controlling member behavior, such as managerial hierarchy, rules procedures, and functional design.

3. Organizations As Open Systems

In the late 1960s, organizational scholars began to broaden their focus to external forces affecting organizational systems. This open systems view was fueled by growing applications of GST to the social sciences and by realization that the behavior of organizational systems could not be adequately explained without examining environmental relationships and their effects on the system (e.g., Aldrich 1979, Buckley 1967, Katz and Kahn 1966, Lawrence and Lorsch 1967, Scott 1981, Thompson 1967). It has led to considerable research about organizational environments, their dynamics and effects, and how organizational systems interact with them. An open systems perspective draws attention to how organizations exchange information and resources with their environment, and how the two mutually influence each other. Moreover, it provides a number of useful concepts for under-standing how organizations maintain functional autonomy while influencing and adapting to external forces.

3.1 Critical Functions

To survive and prosper, open systems need to perform at least four critical functions:

(a) transformation of inputs of energy and in-formation to produce useful outputs;

(b) transaction with the environment to obtain needed inputs and to dispose of outputs;

(c) regulation of system behavior to achieve stable performance; and

(d) adaptation to changing conditions.

Because these different functions often place conflicting demands and tension on open systems, system viability depends on maintaining a dynamic balance among them. Organizational researchers have devoted considerable time to identifying and explaining how these four functions operate and contribute to organizational survival and effectiveness. This has led to knowledge about how organizations and groups produce products and services through operating and developing different technologies; how they protect their technologies from external disruptions while acquiring raw materials and marketing finished products; how they regulate themselves for stable performance while initiating and implementing innovation and change. This research defines a key role of management in organizational systems as sustaining a dynamic balance among these four functions; one that allows the organization sufficient stability to operate rationally yet requisite flexibility to adapt to changing conditions.

3.2 Information And Resource Flows

As open systems, organizations seek to sustain a cycle of activities aimed at taking in inputs of information and resources from the environment, transforming them into outputs of goods and services, and exporting them back to the environment. This cycle enables organizations to replenish themselves continually, so long as the environment provides sufficient inputs and the organization delivers valued outputs. Considerable research has gone into understanding how organizations manage these information and resource flows. One perspective focuses on how organizations process information to learn how to improve themselves and to relate to their environments. Organizations must be capable of learning from their experiences and of disseminating such knowledge widely if they are to change themselves to respond to emerging conditions. Consequently, research has been directed at organizational learning and knowledge management, particularlyatdiscoveringmechanismstoenhancelearning capability, such as shared databases, groupware, and decision-support systems. Another view concentrates on how organizations compete for resources through managing key resource dependencies. Attention has been directed at how organizations gain access to resources without becoming overly dependent on those who supply them. Still another perspective focuses on how organizations gain legitimacy from environmental institutions, so they can continue to function with external support. Researchers have sought to identify the institutional demands of powerful resource providers, and how organizations respond to them.

3.3 Boundaries

In managing information and resource flows, organizations, like all open systems, seek to establish boundaries around their activities. These organizational boundaries must be sufficiently permeable to permit necessary environmental exchange, yet afford the organization adequate protection from external demands to allow for rational operation. Organizational scholars have devoted considerable attention to understanding the dual nature of organizational boundaries. They have studied various boundary-spanning roles that relate the organization to its environment, such as sales, public relations, and purchasing. They have examined how organizational members perceive and make sense out of environmental input, and how organizational boundaries vary in sensitivity to external influences. Researchers have also identified different strategies for protecting transformation processes from external disruptions while remaining responsive to suppliers and customers.

3.4 Self-Regulation

Viewed as open systems, organizations use information about how they are performing to modify future behaviors. Referred to as cybernetics, this information feedback enables organizations to be self-regulating (e.g., Ashby 1956). They can adjust their behavior to respond to deviations in expected performance. To be effective however, organizations must have sufficient diversity of responses to match the variety of disturbances encountered. Thus, as technologies and environments become more complex and uncertain, organizations seek to become more flexible and nimble. They can enhance their adaptive capabilities through such innovations as downsizing, employee empowerment, and re-engineering.

Extensive research has been devoted to understanding how organizations regulate themselves. Using modern information technology, organizations have developed a variety of methods for setting goals, obtaining information on goal achievement, and making necessary changes. For example, database technologies enable organizations to store large batches of information and to logically connect events, actions, and outcomes. Employees can access and revise this information through on-line, common databases.

3.5 Equifinality

As open systems, organizations display the property of equifinality. They can achieve objectives with varying inputs and in different ways. Consequently, there is no one best way to design and manage organizations, but there are a variety of ways to achieve effective performance. This contrasts sharply with a closed system perspective which seeks the one best way to structure and control organizations.

Organizational researchers have devoted consider-able attention to identifying different choices for designing and managing organizations. This has led to a virtual revolution in new organizational designs aimed primarily at making organizations leaner, more flexible, and more responsive to human resources. For example, traditional bureaucratic structures that emphasize efficiency and control have increasingly been supplanted with designs that emphasize flexibility and innovation, such as matrix organizations, horizontal organizations, network organizations, and virtual organizations. Moreover, researchers have developed contingency theories which specify under what technological, environmental, and human conditions different organizational designs are likely to be most successful. For example, these newer, more innovative designs are best suited to situations where technologies are complex, environments are unpredictable, and people have high growth needs.

4. Promising Trends

Organizational researchers have recently applied systems concepts to understand how organizations can adapt to rapidly changing, unpredictable environments. They have borrowed heavily from complexity theory which seeks to explain the behaviors and changes that can occur when the parts of complex systems interact (e.g., Holland 1995, Brown and Eisenhardt 1998).

Such systems tend to be self-organizing in response to environmental feedback; they can change in non-linear and dynamic ways and can invent entirely new responses to external forces. These concepts provide a dynamic, change-oriented perspective on organizations. They help to explain how organizations can restructure themselves continually to keep pace with fast-changing environments.


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