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Organizational Taxonomy

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Organizational Theory Taxonomy

Organizational Theory Taxonomy Title and Theorist Name | General Description | Example of Theory | Other Attributes | Agency Theory, Jensen & Meckling, 1972-1976 | The agency theory applies classical economic thinking to problems of organizational control and design (Tosi, 2009). Agency theory offers a useful way of understanding the complex authority relationship between top management and the board of directors. An agency relationship is when one personal “the principal” delegates decision-making authority or control to another “the agent” (Jones, 2010). | In 2005, Time Warner came under attack because top management had made many acquisitions such as AOL that did not led to increased innovation, efficiency, and higher profits which creates an agency problem that the agency theory addresses (Jones, 2010). | Agency theory views a firm as a legal entity that serves as a nexus for a complex set of formal and informal contracts among different individuals. A typical firm consists of the shareholders or the boards of directors are principals, and top managers or CEOs are agents (Jones, 2010). Agency theory dictates that principals will try to bridge the informational asymmetries by installing information systems for monitoring (Shapiro, 2005). | Contingency Theory, Burns & Stalker, 1961 | The contingency theory shows how some organizational designs will adapt to the environment, depending on the nature of the environment. The contingency theory assumes that in a relatively stable environment, a bureaucratic structure may be more effective than one that approaches a more loosely structured form (Tosi, 2009). | An example is how technology and research and development can influence sales and marketing as well as customers and competitors (Jones, 2010). | The contingency theory describes how the structure of an

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