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differentiation and integration within organisational structures has

emphasised the importance of the task environment within the structural

contingency model of organisations. Interaction between the task and

the stability of the organisations environment, influences the division

of labour within the organisation and produces a differentiated

structure. In the case of a stable environment, mechanistic structures

arise which have a larger number of levels in the managerial hierarchy.

Conversely, unstable environments tend to produce organic structures.

It was also hypothesised that because environments are not homogeneous,

the processes of creating differentiated and integrated structures are

unequal, which means that both mechanistic and organic structures might

appear simultaneously within the organisation as a series of

organisational sub-systems, or 'sub-units'.

A crucial question which arose from this discussion was how the

organisational sub-units are integrated within the structure. The work

of Thompson (1967) especially, pointed out that internal dependence is

manifest in the form of the structure (hierarchy and control systems),

voluntary or behavioural activities, and their relationship with the

task environment of the organisation. Finally, it was concluded that

there is no ultimate structural form, because of variations in the task

and the environment of each organisation. In the end, the literature

on the structural contingency model pointed towards the priorities

which the organisation set itself, rather than simply a straightforward

interaction with the environment, as a principal influence in the

This explanation of intra-organisational structure is not entirely

satisfactory. Although Inequalities within the organisation are

discussed in the structural contingency model, they are not given

enough consideration. A basic feature of the model is the division of

the 'task' into a number of components, which are then structured

within the organisation. Consequently, not only the environment, but

also the task (or component of it) of each sub-unit will vary. By

implication, it can be assumed that sub-units will not all carry equal

weight within the organisation. The structural contingency model, as

it stands, fails to deal with inequalities in intra-organisational

structure, apart from establishing a few basic first principles on the

effects of the environment. To address this question fully, it is

necessary to examine one related but distinct school of thought within

the organisational literature.

Centrality, Power and Dependence

Several problems can be identified with the bulk of the literature

relating to organisational structure. The two most notable problems

are the confused terminologies and the failure to explain which level

of the organisation is being evaluated. With regard to the confusion

of terms, technology, environment and structure have not been

rigorously defined and so there is some confusion over their effects.

The level of analysis is a second major problem. Some studies examine

organisational wholes, whilst others only study sub-units of

organisations. Failure to distinguish between these levels raises many

doubts as to the validity of some of the conclusions. Noting these

weaknesses, Comstock and Scott (1977, p.178) feel it would be

appropriate to:

conceive of organisational structure as an overarching framework of relations linking sub-units of considerable diversity, and to

41 attempt to develop measures that capture the distinctive characteristics of this supra-structure.

As a result, the problem which needs to be conceptualised in the structural contingency m o d e l , is how to distinguish between parts of the same organisation. In this respect, the relationship between the structure of organisational sub-units and organisational wholes has been addressed almost exclusively by a group of researchers based at the Industrial Administration Research Unit in the University of Aston, B i r m i n g h a m .

Initially, the main concern of the Aston group was to derive several descriptive dimensions of organisational structure. The features which were isolated were the degree of specialisation, standardisation, formalisation, configuration, and centralisation in the organisational structure (see Pugh et al., 1968). The specialisation dimension was concerned with the division of labour within the organisation. Procedures were the second category and this was measured in terms of their standardisation. The third dimension,

formalisation, denoted the extent to which rules, instructions, procedures and communications through the structure, were written down. Configuration was the fourth dimension and this measured the 'shape' of the role structure in the organisation, such as the vertical span of control (height), and the administrative ratio (width) of the hierarchical structure. Finally, the centralisation dimension of structure was concerned with identifying the locus of authority for decision-making within the organisation. The centralisation dimension is the most important aspect of the Aston studies in relation to this discussion because it is the only aspect of organisational structure which is not covered in one form or another, in the existing

literature.

In fact the interests of the Aston group gradually focussed on

centralisation, as their changing research emphases indicated. A

theoretical framework was eventually established to explain

inequalities in intra-organisational structure and intra-organisational

relations. However, before the concept of centralisation is discussed

in greater depth, some cautionary comments are required.

Child (1972a) for example, has noted the Aston Studies make some

critical oversimplifications in respect of certain concepts. Notably,

the group failed to recognise the distinction made by Max Weber when

they adopted the use of his two, originally separate, aspects of

authority:

(1) the level to which decision-making is delegated within the organisation; and

(2) the original source of the authority.

The failure to distinguish between these concepts leads directly to

Child's second citicism, which is the use of 'organisations' of

different status within the group's sample. In fact the sample

included not only organisations, but also their branches and subsidiary

elements (organisational sub-units). The upshot of these weaknesses

has been an undoubted effect on the centralisation scores of some

'organisations' (Donaldson, Child and Aldrich, 1975). Given these

shortcomings, the concepts and the empirical findings of the Aston

group, deserve closer attention.

Beginning with the work of Hickson et al., (1971), the Aston group

attempted to operationalise the centralisation concept as a means to

43 concept of centralisation couches the importance of any single sub-unit relative to others in the organisation, in terms of 'power' relations. The concepts and findings of the Aston group therefore differ markedly from those of other structural contingency theorists because the technology, environment and structure of the organisation are all allowed to vary independently. Consequently, the theory of intra-organisational power relations which emerged from this work

(Hickson et al., 1971; Hinings et al., 1974) is to be distinguished from other theories which are concerned with inter-organisational relations. The two theories diverge in their explanation of the source of power. Inter-organisational power has been defined as the ability of one organisation to control the resources necessary for the functioning of another (Pfeffer and Salancik, 1978; Aldrich and M i n d l i n , 1978). In contrast, intra-organisational power is derived, at least at first, by the 'charter' (role) granted to the sub-unit of the organisation, on the authority of the parent organisation. The power of a sub-unit therefore 'might be represented by the formally specified range of activities they are officially required to undertake and, therefore, to decide upon' (Hickson et al., 1971, p.218).

To a certain extent, the emphasis on activities merges neatly with the central role of task, which is used in explaining differentiation and integration in the structure of business organisations. The distribution of tasks is synonymous with the differentiation into sub-units. The Aston group, however, develop more fully their theory of intra-organisational structure. The theoretical extension is made by the distribution of tasks, which produces inequalities within the structure of the organisation. The concept of power as seen by Hickson et a l . , (1971) is derived from four main features of the task set for

any single sub-unit:

(1) the ability of the sub—unit to cope with uncertainty;

(2) the degree to which the activities of each sub-unit are substitutable by the organisation;

(3) the extent to which the work performed by the sub—unit is central to the organisation. This consists of two components:

(a) pervasiveness - the degree to which the sub-unit's workflow is linked to that of the other sub-units in the organisation;

(b) immediacy - the speed and severity with which the workflow affects the final outputs of the organisation; and

(4) the ability of the sub-unit to control contingencies arising within the organisation.

Some of the variables and operationalised sub-variables used by the

group are shown in Table 2.5. It is important to note the element of

the task each sub-unit undertakes is referred to as 'workflow', so that

it describes the degree to which the activities of the sub-unit are

linked with those of other sub-units in the organisation. This is the

crux of the concept of centrality.

Accordingly, the difficulty and variability of the task the

sub-unit is required to carry out determines its importance in a

power-relations network inside the organisation (Van de Ven and

Delbecq, 1974). As the dependent variable, Kaplan (1964) pointed out

sub-unit power has three distinct dimensions: weight (the degree to

which it will affect other sub-units); domain (the number of sub-units

whose behaviour it determines); and scope (the range of behaviours of

each sub-unit it determines). As a result, some sub-units within an

organisation's structure are more powerful than others, and therefore

more 'central' to the organisation. The implication of this theory is

that a system of 'dependency' relations is invoked within the

TABLE 2.5: VARIABLES AND OPERATIONALISED SUB-VARIABLES USED BY THE ASTON GROUP TO DEFINE THE CONCEPTS OF POWER AND CENTRALITY IN INTRA-ORGANISATIONAL STRUCTURE

POWER (weight, domain, scope) COPING WITH UNCERTAINTY, classified as:

Positional power (authority) By prevention (forestalling uncertainty)

Participation power By information (forecasting)

Perceived power By absorption (action after the event)

Preferred power

SUBSTITUTABILITY

UNCERTAINTY Availability of alternatives

Variability of organisational inputs Replaceability of personnel

Feedback on subunit performance

Speed CENTRALITY

Specificity Pervasiveness of workflows

Structuring of subunit activites Immediacy of workflows

Source: Hickson et al. ,(1971, p.219).

4>- Ln

The centrality framework developed by the Aston group provides the

most robust explanation available of inequalities in organisational

structures. Nevertheless, several criticisms are warranted. First,

the distribution of tasks is not the only important factor in

determining the initial power of an organisational sub-unit. The form

of ownership and the position of the sub-unit in the organisation will

also affect these relations. It has been suggested by Evans (1975) and

again by Franklin (1975), that sub-units which are lower down the

organisational hierarchy are more remote from the hub of the

organisation and are less powerful. As Evans (1975, p.258), succinctly

pointed out:

The structure [emphasis added] of multiple hierarchies may well be more critical in determining organisational effectiveness than spans of control or the number of levels in the hierarchy. Furthermore, multiple hierarchies present a new set of structural variables with which to explain the distribution of power among positions within the organisation.

Indeed, Franklin observed a lagged effect when information and

orders are passed down the hierarchical structure of the organisation,

and in a related discussion, Ouchi (1977) demonstrated this filtering

process can create a position in which direct control over the sub-unit

is lost. Thus, even though some plants can be central to the

organisation in relation to the task they carry out, in ownership terms

they can be peripheral. In order to control these sub-units, an

organisation may have to exert new methods of monitoring (Ouchi and

Maguire, 1975). While the Aston studies placed considerable emphasis

on the organisation being able to maintain control, other findings have

demonstrated that centrality can also be determined by how influential

a sub-unit is, ownership remoteness being no real barrier (Mizruchi and

47

For example, Negandhi and Reimann's (1973) study of thirty

manufacturing firms in India illustrated that decentralisation within

an organisation's structure can allow the more peripheral sub-units to

be more effective. In other words, as the authors go on to establish,

the performance of a sub-unit may also be influenced by the wider

environment, as well as the organisational or task environment.

Alternatively, Hirsch's (1975) comparative study of companies involved

in the pharmaceutical and record industries in the United States

demonstrated how important the position of a sub-unit within the

organisation might be in relation to performance. Despite many

environmental similarities, the profitability of those companies

operating in the pharmaceuticals industry grew more rapidly than those

in the record industry, because the sub-units had been able to exercise

control over their institutional environment by means of patents,

distributional practices and control over wholesale prices. Indicators

suggest that the issues of ownership and the position of each sub-unit

within the organisation, will be important in the creation of

inequalities in organisational structure. These aspects of centrality

are not approached in the Aston studies.

A second related criticism is the failure of the Aston studies to

appreciate historical factors. How do power relations change over time

within the structure of the organisation? According to the Aston

model, the power of a sub-unit is determined by the charter (task)

granted to it in the first instance by the organisation. In reality, a

number of other processes affect this structure and these are not

considered by the Aston group. For instance, an organisation is often

restructured for administrative reasons, or sub-units may be added to,

processes might have a significant effect on the balance of power

relations within the structure of the organisation.

A final criticism of the Aston model of intra-organisational

relations is its failure to include space as an integral element of

structure. Unwittingly, Child (1972a) noted that there is a process of

differentiation of tasks within the organisation away from core

functions and between sub-units, and this pattern may have geographical

corollaries. A geographical perspective of organisational structure

may help explain why, for example, the effects of technology have been

found to be strongest close to the primary or central work locations

within the organisation (e.g. Comstock and Scott, 1977).

Summar>'

This section has examined some of the principal dimensions of

organisational structure, beginning with the structural contingency

model of organisations and looking in detail at the reasons for and

processes behind, the creation of different types of organisational

structures. The level of debate in the organisation theory literature

concerning the processes of differentiation and integration, coupled

with an understanding of how inequalities are created by an unequal

distribution of authority between organisational sub-units, is a marked

improvement over the simple and sometimes absent notions of

organisational structure in industrial geography.

Notwithstanding the conceptual and operational shortcomings of the

organisational literature with regard to structure, this

conceptualisation might be profitably transferred to industrial

geography, to gain an improved understanding of the structure of

49

establish precisely what generalisations can be extracted from

industrial geography on the spatial and structural dimensions of

business organisations.

THE SPATIAL S T R U C T U R E OF BUSINESS ORGANISATIONS

In comparison with theories of the structure of business organisations

in organisation theory, the geographical literature is ad hoc

(McDermott and Taylor, 1982) and consequently only partial in its

treatment of corporate structure (Hayter and Watts, 1983). However,

two distinct themes do emerge from the literature and these are used as

a framework for discussion in this section. The first theme revolves

around the interest of a number of industrial geographers in the

evolution of business organisations. The present discussion

concentrates on the literature which deals directly with larger

business organisations and does not address the smaller firm.

Furthermore, in keeping with the discussion in Chapter One, particular

attention is paid to how corporate organisation and spatial structure

change during the stages of the internationalisation of production in

large business organisations. The second theme relates to the

multi-plant structures which are a characteristic of the corporation.

The Internationalisation Process and Corporate Structure

Conceptualisation of the structural metamorphosis associated with the

internationalisation process in business organisations was initially

modelled in a four stage development sequence by Chandler (1962) and

later by Ansoff (1965). The four stages are market penetration,

product development, market development and diversification, and these

level (see Taylor and Thrift, 1982a). A more extensive treatment of the geographical and structural implications of corporate development was given in the landmark study by Stopford and Wells (1972). As this is one of the four studies which has considered the transition from a national level of operations to a multinational level in anything approaching a comprehensive w a y , it deserves a brief outline.

Stopford and Wells (1972) propounded multinational business organisations had three strategic options for development open to them: structural, product and area or geographic, or indeed, combinations of e a c h . The model outlined a pattern of structural changes in 187 American business organisations selected from the Fortune list of companies, in 1963 and 1964. Together with examples of relevant geographical literature which will be discussed below, the stages and structures advanced by Stopford and W e l l s , and others which have subsequently been added, are summarised in Figure 2.2.

At a strictly sub-national level of operation, the sequence by w h i c h small firms grow into large business organisations, first locally

and then at an inter-regional scale by a risk-minimising diffusionist strategy, has been described by Taylor (1975) and Watts (1980a). Growth from a single product, single plant establishment, to a larger business organisation, usually results in a structure which is organised around functional divisions (Figure 2.3a), such as production, marketing and research. Increasingly however, the processes by which small firms snowball into larger ones is becoming restricted by government policies and by an inability to gain access to capital for expansion (see Taylor and Thrift, 1981; 1983). T h u s , given that some firms were able to grow, the concern of the argument

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