Challenges

Reed (1996) argues that disparate perspectives in organizational theory have created a field that is fragmented, discontinuous, and struggling for acceptance. Further, whether mutually exclusive or integrated, most organizational theories do not stand up to empirical analysis (David & Marquis, 2005). David and Marquis argue that the dynamic nature of evolving markets requires organizations to adapt continuously, making it virtually impossible to predict and control organizational outcomes. David and Marquis propose that organizational theorists shift from a theory-driven focus on organizations to a problem-driven focus on institutions. By focusing on institutions, theorists can provide a framework that more rapidly adapts to the dynamic context in which organizations operate.

From a more practical perspective, after spending 10 years examining more than 200 management practices in 160 organizations, Harvard researchers Nohria, Joyce, and Roberson  (2003) concluded that most management practices have “no direct causal relationship” to superior performance in organizations. The key to superior performance was merely “having a strong grasp” on organizational basics. Nohria et al. identified the primary practices of superior organizations as strategy, structure, culture, and execution. The secondary practices for superior organizational performance are talent, leadership, innovation, and mergers and partnerships. Using profitability as a critical measurement of performance, Nohria et al. found that organizations that mastered all four primary practices plus two of the secondary practices produced results that were four to ten times higher than organizations that did not (pp. 42-52).