Abstract
The purpose of this paper is to construct a middle range theory of organization structure on the basis of generalized propositions derived from empirical researches on formal organizations. There are two, confronting views regarding the determinants of structural differentiation in organization. One, of which Blau & Schoenherr are representatives, focuses on the size of organization. The other view, whose main proponents are March & Simon, and recent contingency theorists as well, emphasizes the importance of environmental factors.
This paper presents an explanatory scheme of differentiation in organization, which includes the basic ideas of the two views. The scheme specifies the factors which determine minimum and maximum levels of the differentiation. The minimum level is explained by two independent variables, size and standardization of environment, and a parameter, “administrative capacity”. The maximum level is explained by three independent variables, standardization of environment, autonomy of units and inter-unit heterogeneity, and a parameter, capacity of organization which integrates various units, . Our conclusions are as follows.
1, If other conditions are constant, the more an organization standardizes its environment, the larger does its degree of freedom in differentiation become (and consequently, the more difficult to predict relationship between the degree of differentiation and standardization of the environment).
2, If other conditions are constant, the larger an organization is, the narrower does its degree of freedom in differentiation become and consequently, the easier to predict relationship between the degrees of differentiation and the size.
