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How Companies Work

04-23-2015 07:45 PM CET | Business, Economy, Finances, Banking & Insurance

Press release from: Austrian Science Fund FWF

Markus Reitzig puts theories of organisation to the test. In a research project funded by the Austrian Science Fund FWF the economist compares well-proven and novel organisational approaches and explores issues of authority and self-selection.

The last twenty years have seen, alongside companies organised in the traditional manner, the emergence of new forms of organisation which are mainly driven by developments in information technology (IT). Examples include open-source projects such as Wikipedia or innovative start-ups. At the same time, a host of new approaches have appeared in management literature to describe and better understand this new world of work.

Does that mean that everything done yesterday is obsolete? Is it true, for instance, that new organisational forms increasingly get by without authority and hierarchy and that staff members choose their tasks according to their own skills? Do the most recent theories really deliver on their promise or are they perhaps only myths of a brave new world of work? These are the issues investigated by the economist Markus Reitzig from the University of Vienna in a large-scale research project supported by the FWF. "I don't think recent phenomena make our entire existing knowledge obsolescent", argues the expert on strategic management and organisational design. "We examine what aspects of well-proven methods are still valid and where existing theories that explain how organisations work need to be revised", describes Reitzig.

Empirical Investigations of New Forms of Organisation
In an important part of the project Reitzig and his team use the Sourceforge Research Data Archive (SRDA) where data from the website are archived. Supporting companies in the implementation of projects by providing free software, this website already boasts more than 400,000 projects and 3.7 million registered users. "With the help of the archived data we can model what exactly happened in these projects, who took on what task at what point in time and what the result was", explains Reitzig. On the basis of several thousand observations, the researchers assess whether open-source software projects are actually co-ordinated without a classical authority structure. Additionally, they study the effect of mechanisms of self-selection.

Traditional Values vs. New Forms
"Authority and hierarchy have been and remain extremely relevant structural aspects in organisations", emphasises Reitzig. According to him, even motley and unconventional teams need one person to take a decision in the end. As regards the legitimisation of this authority, research shows that in many modern forms of organisation competence and entrepreneurial spirit were the qualities that prompted co-workers to readily follow one person's lead. "Conversely, we also know that rigid hierarchies can have a genuinely paralysing effect on middle management", adds the scientist, who feels that this aspect needs more research.
IT is just one trend that differentiates the world of yesterday from that of today. Reitzig identifies other phenomena that lead to the emergence of new organisational forms, such as exploding demographic growth, cross-border exchanges of goods and services or resource shortages. "New organisational structures will emerge wherever these new trends result in tasks being defined differently or entrusted to other entities than in the past, for instance in crowd sourcing, or if they lead to new remuneration patterns."

Basic Principles of Organisations
In another central section of the project, the researchers from the University of Vienna explore how certain basic principles of organisations emerge in the first place, "specialisation", for instance. This is an essential question since commercial undertakings will create added value only if they derive benefit from specialisation. "How exactly specialisation develops is something we know surprisingly little about", notes Reitzig. By interviewing young companies and conducting ethnographic studies of start-ups, the scientists intend to shed light on these fundamental questions.

Personal details:
Markus Reitzig is professor at the Department of Business Administration at the Faculty of Business, Economics and Statistics at the University of Vienna. His main research areas are strategic management, organisational development and innovation research. The FWF research project Organisationsdesign für neue Organisationsformen (2015-2018) is conducted in co-operation with the Technische Universität München and the INSEAD Business School in Singapore.

Article and photo will be available as of Monday, 20 April 2015 from 10.00 am CEST at:

FWF Austrian Science Fund

The Austrian Science Fund (FWF) is Austria's central funding organization for basic research.

The purpose of the FWF is to support the ongoing development of Austrian science and basic research at a high international level. In this way, the FWF makes a significant contribution to cultural development, to the advancement of our knowledge-based society, and thus to the creation of value and wealth in Austria.

Scientific Contact:
Univ.-Prof. Dipl.-Chem. Dr. Markus Georg Reitzig, MBR
University of Vienna
Department of Business Administration
Oskar-Morgenstern-Platz 1
1090 Vienna, Austria
T +43 / 1 / 4277 - 37970

Austrian Science Fund FWF:
Marc Seumenicht
Haus der Forschung
Sensengasse 1
1090 Vienna, Austria
T +43 / 1 / 505 67 40 - 8111

PR&D – Public Relations for Research & Education
Mariannengasse 8
1090 Vienna, Austria
T +43 / 1 / 505 70 44

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