Corporate Entrepreneurship: Organizational Structure

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Table of Contents

Academic Literature Pertaining to Organization Structure Theory
How Apple Builds an Entrepreneurial Organization
Conclusion
Reference List

Organizational theory is a vital aspect that constitutes various patterns and structures applicable in solving problems, increasing efficiency, and maximizing productivity in corporations. In essence, it adopts these designs to formulate multiple approaches to help companies function best (Uzzi, 1996, p. 674). Therefore, some theories such as classical theory, human relations model, decision approach, and systems framework are imperative in explaining how different corporate structures contribute to operational efficiency and profitability.

Another significant aspect of management is corporate entrepreneurship which allows businesses to improve their innovation strategies. For example, the world’s renowned technology company, Apple, is recognized as a leader in novelty and ground-breaking ideas due to its adoption and use of corporate entrepreneurship (Danko et al., 2019, p. 1850). This paper discusses the relevant academic literature pertaining to organization structure theory and explains how Apple has established an entrepreneurial organization.

Academic Literature Pertaining to Organization Structure Theory

Organizational theory is a tool which allows managers to study the characteristics of different structures which constitute the functions of a company. In contrast, corporate structures are the configurations which give a firm its formal means of arranging other tasks and departments in an attempt to facilitate dissemination of information and minimize workload (Joseph and Gaba, 2020, p. 267). Therefore, different theories have been used to explain the concept of organizational structures, such as the classical management model, decision theory school, human relations principle, and open systems approach.

Classical Management Model

This approach provides a well-define description of how employees operate in a corporate structure. Therefore, classical management theorists are a group of individuals who view businesses as machines and human beings as components of the machinery (Glückler, 2005, p. 1727). Consequently, they hold the belief that the efficiency of a firm enhances the employees’ effectiveness. For example, two famous individuals who developed the concept above are Henri Fayol and Frederick Winslow Taylor (Grant, 1996, p. 61). While the latter focused on explaining how to increase the productivity of the shop by using time and motion, Fayol was interested in examining management as an entity (Granovetter, 1985, p. 481). He and his colleagues accentuated the need to set a well-defined corporate objective and make comprehensive specifications of the functions to be performed. Therefore, they expected performance to be at its peak by organizing activities into various departments, delegating control, and establishing formal relationships among the staff workers. Moreover, Fayol and his peers supported strict upper limits on the senior management’s span of control (Sigfusson and Chetty, 2013, p. 260). In essence, this theory primarily focused on explaining the relationship that exists between the workers and the organizational structure.

Human Relations School

The human relations theory is an approach which focuses on explaining the effectiveness of organizational structures based on worker satisfaction and factors that influence employee productivity. This model received its impetus from the performance-based experiments at the Hawthorne Plant of Western Electric in the 1920s (Stokvik, Adriaenssen and Johannessen, 2016, p. 341). According to the test results, increases in productivity are attributed to some group norms and individual incentives rather than the work conditions of an organizational structure (Blau, 1970, p. 201). These theorists have outlined the different subsets of the human relations model as group dynamics and informal organization (the configuration of unofficial activities, norms, relationships, and communication patterns) (Ali et al., 2018. p. 108). Therefore, work groups are considered as fulfilling essential individual requirements and hence become imperative components of the organizational design.

Decision Theory School

Decision theory is a model which explains the concept of organizational structures on the basis of decision-making. Herbert Simon and James G. March’s work is a prime example of the theory above, which uses individual viewpoints in reviewing the process of decision-making in organizations (Majidi, Mohammadi-Ivatloo and Soroudi, 2019, p. 157). They argue that people tend to be logical when choosing the best outcome based on the costs and benefits involved (Boschma, 2005, p. 61). In explaining corporate structures, decision theorists classify organizational goals by dividing them into departmental subgoals. The model is primarily segmented into two categories such as normative and optimal decision approaches. The former examines the outcome of choices, whereas the latter investigates and evaluates the reasons attributed to the decisions people make (Teece, 2018, p. 359). In essence, this approach gives managers an idea of how they can alter employee behavior by changing decision-making avenues.

Systems Theory

Systems theory explains the interrelationship that exists between an organization and its employees. Researchers in this school of thought view the company as a unit with a supply of resources (input), a conversion process, and the production of commodities (output) (Teece, 2018, p. 359). The open system theorists are differentiated from closed systems philosophers in that the former consider the introduction and transfer of energy as occurring with respect to the outside environment (Danko et al., 2019, p. 1850). They have disapproved the closed system theorists for not acknowledging the reliance of organizations on inputs from their surroundings and for overstressing determinants of internal functioning (Burgelman, 1984, p. 33). Therefore, this creates the need to explain the concept of open system theorists.

The open systems model considers the identification and mapping of recurrent cycles of input, transformation, output, and regenerated input which consists of the organizational pattern (Burt, Hogarth and Michaud, 2000, p. 123). Moreover, various generic system components of a company include the production, associated with throughput, structures facilitating manufacturing, supportive institutional functions to ensure favorable relations within the company (Ferreira, Mueller, & Papa, 2018, p. 121). In addition, maintenance structures are also included to indemnify the adequacy of human sources, whereas an adaptive framework is present to instigate appropriate responses to the dynamics in the environment (Leis, 2018). Lastly, managerial system components are considered vital because they coordinate and control different elements of the system (Burt and Merluzzi, 2014). In essence, these are the features of a system which are imperative for open system theorists in explaining the organizational structure and functioning (Benzer et al., 2017, p. 33). Generally, this approach is advantageous compared to other models because of its practical and consideration of the environment affecting a company and the workers.

How Apple Builds an Entrepreneurial Organization

An entrepreneurial organization is a company that practices entrepreneurship, the process by which the firm engages in developing new entrepreneurship products, processes, and services to create value and make profits through innovative thought and measures. In the contemporary world, various industries are influenced by some dynamics proving to be a challenge to modern-day firms (Dubini and Aldrich, 2002, p. 217). Therefore, leaders have incorporated different strategies to stay flexible and respond effectively to the changes in the business sector. Apple is an exceptional example of an establishment applying the concept of corporate entrepreneurship in several ways.

Leadership

Entrepreneurial firms prioritize leadership over management due to several reasons. In the case of Apple, the late Chief Executive Officer (CEO), Steve Jobs, inspired his team members by creating a philosophical booklet which highlighted a well-defined vision of the company (Kim, 2020, p. 17). The principles outlined in the pamphlet have been influential in today’s business as managers from various companies are using them to nurture employee engagement and impetus. Moreover, Jobs’ philosophies are imperative because they facilitate behavior to be reinforced through more empirical means than through compensation packages (Kim, 2020, p. 17). Therefore, the American technology giant continues to be resourceful and pioneering due to a psychologically invested and well-equipped workforce striving to achieve Apple’s large vision.

Employee Profile

Companies that follow corporate entrepreneurship do not employ individuals with capitalist characteristics. However, these firms create an organizational culture that promotes innovative practices. The four important qualities of an entrepreneurial personality are proactivity, vision, opportunism, and creativity (Inkpen, 1998, p. 69). Proactive behavior is the tendency to solve problems before they happen, whereas opportunism is the propensity to identify new business opportunities. Creativity is the ability to produce problem-solving ideas relating to originality and preference for novel strategies (Grant and Baden-Fuller, 2004, p. 61). In contrast, a visionary individual is a person who is able to anticipate, bring change, and create progress. Since a few people possess these qualities, leaders adopt psychometric practices to identify unique talent. Moreover, building teams with a balancing mix of proactive, visionary, innovative, and resourceful people can generate ground-breaking and practical ideas.

In the case of Apple’s co-founders, Steve Jobs and Steve Wozniak achieved the ideal equilibrium. Jobs mainly was a pioneering individual, whereas Wozniak was a professional in technology-related aspects (McCausland, 2021, p. 59). While Jobs could not program a computer, he had an idea of how he wanted it to operate. Conversely, Wozniak grasped Job’s concepts and understood how to make them a reality. From this case, managers learn the significance of developing a culture that promotes entrepreneurial practices rather than searching for individuals who possess such qualities (Jack, 2010, p. 120). Both Wozniak and Jobs made a stupendous duo, the kind that contemporary leaders should follow.

Organizational Structure

An organizational structure is imperative for corporate entrepreneurship because it defines how tasks are formally divided, categorized, and coordinated. Therefore, an entrepreneurial company requires a business configuration that maximizes the exploitation of market gaps (Kuratko, 2017, p. 441). Apple is famous for its functional organizational structure, which has driven its novelty over the years. Under Steve Jobs’ regime, the American giant had a conventional layout with business units (Kim, 2020, p. 17). However, when Jobs restructured it, he introduced a functional model that aligns expertise with decision rights.

Since Apple’s primary purpose is to manufacture products that enhance people’s lives. Therefore, Tim Cook, the incumbent CEO, has utilized Jobs’ principles to uphold the company’s vision (Kim, 2020, p. 17). For example, the company distinguishes itself from the competition by continuously improving its product features, as seen in the iPhone camera (Hsiao, 2017, p. 186). Apple leadership requires deep expertise, immersion in details, and collaborative discussion. Therefore, its functional structure enables it to create such innovations. Its central belief is that individuals with the most skills and experience in a sphere should have decision rights for that field (Yunis, Tarhini and Kassar, 2018, p. 334). This approach is based on the fact that Apple operates in markets with high rates of technological change and disruptions. Therefore, it must depend on the verdict and awareness of people with deep knowledge and skills of the technologies responsible for the obsolescence.

Apple’s functional structure also builds corporate entrepreneurship by focusing on leadership characteristics. Ever since Steve Jobs incorporated this formal arrangement, the company’s managers in every domain have been expected to have three significant leadership traits (Kim, 2020, p. 18). First, deep expertise enables individuals to perform their tasks and meet deadlines. In contrast to other organizations where general managers supervise their colleagues, at Apple, these experts lead their fellows (Nambisan et al., 2017). Second, an approach that permeates the American giant is “leaders should be aware of their business three levels down” because it is imperative for quick and effective cross-functional decision-making at the executive levels (Parkhe, 1993). Lastly, Apple expects its leadership to willingly and jointly have discussions. Collaborative debates are essential in this company, as seen in the development of the iPhone 7 plus dual-lens camera, which involved group effort of several teams such as camera software, motion sensor hardware, silicon design, and many more (Hsiao, 2017, p. 186). In essence, Apple practically builds an entrepreneurial organization based on its leadership approaches, corporate structure, and employee profile.

Conclusion

This paper has discussed the relevant academic literature explaining the concept of organization structure theories. In essence, the classical management model has highlighted some key attributes, such as giving clear goals and objectives of its assumption. The model is also vital because it provides an informative job description to the lowest level of various organizational structures. However, the researchers’ assumptions in this school of thought did not consider human needs and motivation. Moreover, classical theorists were overly rational and streamlined the function of management. While these theories give a broad view of the forces shaping an organization, managers should be able to apply them in different scenarios.

America’s most valuable brand, Apple, has successfully built an environment facilitating corporate entrepreneurship as explored above. The technology brand has achieved this by focusing on three significant aspects of management. First, the leadership principles and environment established by the late Steve Jobs have been influential in the firm’s success. Second, Jobs was able to incorporate an employee profile which promotes proactivity, creativity, vision, and opportunism. Third, Apple’s functional organizational structure, introduced by Jobs, has played a vital role in its path of building an entrepreneurial firm. In essence, Apple remains one of the most exceptional companies promoting corporate entrepreneurial environment.

Reference List

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Danko, T. P. et al. (2019) ‘Impact of Intangible Assets on Competitive Positions of the Apple Company’, Journal of Advanced Research in Law & Economics, 10, p. 1850.

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