Organizational Theory - Rise of Organizations

Rise of Organizations

Organizations, which are defined as “social units of people that are structured and managed to meet a need or to pursue collective goals (“Organizations”),” are said to have risen in the United States within a variety of social and historical contexts. Several of those factors are credited with making organizations viable and necessary options for citizens, and they built on one another to bring organizations to the level of importance that they are at today.

In 1820, about 20% of the United States population was dependent on a wage income. That number increased to 90% by 1950 . Generally, farmers and craftsmen were the only ones by 1950 who were not dependent on working for someone else; prior to that, most people were able to survive by hunting and farming their own food, making their own supplies, and remaining almost fully self-sufficient . As transportation became more efficient and technologies were further developed, self-sufficiency became an economically poor choice . As in the Lowell Textile Mills, various machines and processes were developed for each step of the production process, thus making mass production a cheaper and faster alternative to individual control. In addition, as the population grew and transportation progressed, the pre-organizational system struggled to support the needs of the market . These conditions made for a wage dependent population that sought out jobs in growing organizations, leading to a shift from individual and family production.

In addition to a shift to wage dependence, externalities from industrialization also created a perfect opportunity for the rise of organizations. Various negative effects such a pollution,workplace accidents, crowded cities, and unemployment all necessitated attention. Rather than small groups such as families and churches being able to control these problems as they had in the past, new organizations and systems were required in order to keep their heightened effects down . The smaller associations that had contained various social issues in the past were no longer viable, and instead were collapsed into larger formal organizations. These organizations were less personal, more distant, and more centralized; but, what they lacked in locality, they made up for in efficiency . Along with wage dependency and externalities, growth of industry also played a large role in the development of organizations. Markets that were quickly growing and expanding needed employees right away – because of that, a need developed for organizational structures that would help guide and support these new employees . Some of the first New England factories relied on daughters of farmers at their onset; later, as the economy changed, they began to gain work from the farmers, and finally, European immigrants. Many Europeans left their homes for the promises of US industry, and about 60% of those immigrants stayed in the country. They became a permanent class of workers in the economy, which allowed factories to increase production and produce more than they had before . With this large growth came the need for organizations and leadership that was not previously needed in small businesses and firms.

Overall, the historical and social context in which organizations rose in the United States allowed for not only the development of organizations, but also for their spread and growth. Wage dependency, externalities, and growth of industries all played in to the change from individual, family, and small-group production and regulation to large organizations and structure.