Open Organizations

The following article provides a summary of open organizations, from a theoretical, applied, and research perspective. The idea of open systems was first proposed in the mid twentieth century by Austrian biologist Ludwig von Bertalanffy. Scholars quickly realized its applicability across a variety of disciplines, and it soon became a conceptual tool for understanding social as well as biological systems. The characteristics common to all open systems are defined; open organizations are then contrasted with closed organizations, often referred to as bureaucracies. Examples of how open systems theory has been used to study different types of organizations and organizational practices are provided. Finally, changes to organizations and organizational theory are discussed.

Keywords Boundaries; Entropy; Environment; Feedback; Input; Negative Entropy; Macro; Micro; Output; Throughput; von Bertalanffy, Ludwig

Open Organizations

Overview

In the introduction to their 1966 book titled "The Social Psychology of Organizations," co-authors Katz and Kahn argued that sociologists and psychologists alike had overlooked the importance of studying human behavior in the context of organizations. This was especially ironic they implied, because "people spend the greater part of their waking hours in organizations and institutional settings" (p. 2). Their goal was to encourage social scientists to extend their focus beyond the individual, and Katz and Kahn (1978) believed they had found the conceptual tool that would allow them to do so. Open systems theory, a multi-disciplinary theoretical perspective, would give researchers insight into the complex and sometimes mysterious workings of large social structures.

Open Systems Theory

Open systems theory - also referred to as general systems theory - was first developed in 1950 by Austrian biologist Ludwig von Bertalanffy (Katz & Kahn, 1978). Von Bertalanffy's goal in developing the theory was to find a framework that could be applied to all living things, "from the study of a single cell to the study of a society" (Katz & Kahn, 1878, p. 8). His search for unity across the biological, physical, and social sciences led to a dramatic shift in perspective; "nowhere", Scott (2004) argues, "did [his ideas] have a larger impact than in organizational studies" (p. 4). The shift in perspective is best described by Buckley (1967), one of the first sociologists to apply systems theory to the study of human behavior. He wrote, "modern systems theory…[has] led away from concern for inherent substance, qualities, and properties to a central focus on the principles of organization per se, regardless of that which it is that is organized" (p. 36).

To understand an organization from the open systems perspective is to understand one fundamental fact; organizations interact with the environment - receiving inputs and releasing outputs - and are, as a result, in a continuous state of change. Although the theory is much more complex than this, it is this one overarching element that helped shift researchers' focus from actors (e.g. managers, employees) and internal processes to the environment in which the organization operates. As Scott (2004) explains, "in important respects, much of the history of the development of organizational studies during the last quarter of the twentieth century to the present reflects a growing recognition of the many and diverse ways in which environment constitutes, influences, and penetrates organizations" (p. 5).

Systems Theory & the Social Sciences

Before introducing the specifics of open systems theory, it's important to first contextualize its application to the social sciences. Although sociology and organizational psychology are indebted to the biological and physical sciences for the development of the theory, they are equally quick to point to the ways in which social systems are different from other living organisms. As Katz and Kahn (1978) explain, "Systems theory in its general form…furnishes the framework or skeleton for all science. It remains for the various disciplines to supply the flesh and blood…Our discussion of the common characteristics of all open systems should not blind us to the differences that do exist between biological and social systems" (p. 36). More specifically, Katz and Kahn (1978) argue that social systems are more variable and complex than living organisms, because they are invented by people. Furthermore, social systems don't have physical boundaries in the same way that biological structures do; function defines structure more than physical characteristics.

Micro & Macro Perspectives

The introduction of open systems theory to the social sciences brought some confusion, and perhaps even concern, about the dramatic shift from a micro to a macro perspective. Previously, industrial psychologists focused on the individual and his or her behavior within the organization; how would the analysis of individual behavior contribute to a paradigm that emphasized the collective? Katz and Kahn (1978) responded by arguing that "open systems theory permits the use of both levels, the conceptual for macro and system variables, the phenomenal level for the actual facts to be gathered" (p. 13). In other words, even though open systems theory takes the social system as its conceptual starting point, observations and reports of individual behavior and attitude are still important for validating the theory itself.

Theoretical Roots

Finally, although open systems theory originated in the physical and biological sciences, several social scientists helped pave the way for the shifting focus from the individual to systems (Katz & Kahn, 1978). As Katz and Kahn (1978) explain, "the roots of open system theory go deep, and the lines of historical development are not clear" (p. 4). They cite Karl Marx, Talcott Parsons, and F.H. Allport as important early contributors to the perspective. Of the three, Allport arguably overlapped most with open systems theory; he was the first to argue that the function of systems provide its structure, patterns of behavior in organizations are cyclical instead of linear, and cause and effect can rarely be explained by a single variable (Katz & Kahn, 1978).

Further Insights

Common Characteristics of Open Systems

Katz and Kahn (1978), borrowing from general systems theory proposed by von Bertalanffy, outlined ten characteristics common to all open systems. Although these ten characteristics are common to all open systems, they argued, open systems differ in other important respects. "If this were not the case," they explained, "we would be able to obtain all our basic knowledge about social organizations through studying biological organisms or even through the study of a single cell" (p. 23). The following list is a summary of the characteristics outlined by Katz and Kahn (1978).

• Energy Import: Open systems import energy from their environment, in much the same way a cell receives oxygen from the bloodstream. No social system is self-sufficient or self-contained.

• Throughput: Open systems transform the energy imported from the environment into a product. In other words, some kind of work is done within the system. The body converts calories into heat, for example, while an auto manufacturer transforms raw materials into vehicles.

• Output: Open systems export a product back into the environment. The ability of the organization to export a product depends, in part, on the receptivity of the environment. If a service or product isn't needed, exportation of the output may be stalled.

• Cycles of events: An organism's energy exchange with the environment has a cyclical nature. The product exported by the organism stimulates the production of energy in the environment, which is imported back into the organism to support further production. An automobile manufacturer produces and markets cars; the money (energy) generated by the sale of cars gives the manufacturer the means to buy more raw materials to continue the cycle of production.

• Negative entropy: Open systems must reverse the entropic process. "The entropic process," Katz and Kahn (1978) explain, "is a universal law of nature in which all forms of organization move toward disorganization and death." That is, all open systems eventually lose the ability to import energy, or transform it once imported; the remaining existing energy dissipates and death occurs. Social systems, unlike biological systems, however, can theoretically reverse the entropic process indefinitely.

• Feedback: Open systems receive information or feedback from the environment as well as energy. The information helps the system better understand the environment, and how well it is functioning in relation to the environment. Feedback is a selective process; systems ignore some information and attend to other information.

• Dynamic homeostasis: Open systems continuously import energy and export outputs, creating a steady state. Any disruptions to a system are counterbalanced by forces which attempt to restore the system to its original state. Thus, the steady state is not entirely motionless. In an attempt to preserve itself, however, systems often import more energy than needed. As a result, the steady state is often a state of growth and expansion (Katz & Kahn, 1978, p. 28).

• Differentiation: Open systems become more elaborate and differentiated as they grow; general functions are replaced by specialized ones.

• Integration and Coordination: As a system becomes more differentiated, it must also hold itself together. The processes of integration and coordination help it maintain a unified whole.

• Equifinality: Open systems can develop in a variety of ways. That is, two systems can reach similar states even though they start under different circumstances, and follow different developmental paths.

Although open systems theory emphasizes the interaction of an organization with its environment, Katz and Kahn (1978) make one qualifying remark about boundaries. An open organization must maintain stable internal processes even as it interacts with its environment. In other words, "the completely open organization would no longer be differentiated from its environment and would cease to exist as a distinct system" (p. 31). As a result, openness is a relative term, rather than an absolute. Mink, Mink, Downes, and Owen (1994) phrase it this way: "Any organization or system can be described on a continuum from completely closed to completely open…although no system reaches either extreme" (p. 6).

One final characteristic of open systems is implied in the above list of common characteristics, rather than stated explicitly. The parts of a system, or subsystems, are interrelated, so that movement in one part of a system can be predicted based on the movement in another part (Katz & Kahn, 1978). Mink, et., al (1994) refer to this quality as both interdependence and interchange. Using a familiar analogy, they write "it does not matter where in the pond a rock is dropped, its very presence will cause ripples across the entire surface" (p. 31).

Open & Closed Systems (Bureaucracies)

Katz and Kahn's summary of open systems is a bit abstract, and has difficulty providing a clear picture of an open organization functioning in the twenty-first century. How exactly do these characteristics play out in the day-to-day operations of modern businesses and institutions? Mink et al. (1994) suggest that open systems come into sharper focus when contrasted with closed systems, or bureaucracies. Open and closed systems differ, they argue, along seven important dimensions - structure, atmosphere, leadership, planning, motivation, communication, and evaluation.

According to Mink et. al. (1994), the overarching goal driving bureaucracies and closed organizations is stability, or the maintenance of the status quo. Bureaucracies tend to be hierarchical, rule-oriented, and ritualistic. The atmosphere is often formal and competitive, and leadership is controlling, seniority-driven, and top-heavy. Employers motivate employees through the use of external rewards and punishment, communication often flows in only one direction - from top to bottom - and evaluations are often subjective.

In contrast, Mink et., al (1994) describe open systems as future-oriented, adaptable and changing. The structure of open systems is flexible and purposive, characterized by networks of people rather than hierarchies. The atmosphere is warm, informal, and goal-oriented, and the leadership values risks and creativity. Decisions are made collaboratively, communication flows freely in all directions, and employees are motivated intrinsically. Open organizations continuously exchange activities, data, and ideas with customers and suppliers so that decisions can be made proactively rather than reactively. Mink et. al (1994) further define open organizations as those that foster quality relationships and connection, and whose employees share values, a sense of purpose, and a vision.

Applications

Open systems theory has been applied to the study of organizations in a variety of different ways. A few discussed here are,

• To understand the progress of women in higher education,

• A way to evaluate the equity of performance appraisals, and

• A way to evaluate the effectiveness of secondary schools,

Women in Higher Education

Kassner (1989) utilized open systems theory to analyze the place of women in higher education. At the time of her research, women were disproportionately underrepresented in the top positions in universities (full professorships, administration, etc.) relative to their participation in the workforce in general, and their representation among doctoral recipients. Drawing upon the common characteristics of open systems, Kassner (1989) argued that women represent a source of input or energy to universities, and that their presence, in turn, alters the nature of outputs produced by universities. She encouraged universities to develop methods for integrating and coordinating women into the organization, suggesting that their presence strengthens the overall health of the university. Recognizing the influence of environmental context, Kassner (1989) argued, "if women have become an important force in the greater society, women also should have become an influence in the academe" (p. 59).

General University Governance

Kezar and Eckel (2004) applied open systems theory to institutions of higher education as well, focusing on the overall governance structure of universities and the challenges they now face. According to the authors, universities face increasingly complex demands - to solve social problems, educate more diverse student bodies, etc. - while facing budget cuts and less participation on the part of its faculty in making decisions. As governing responsibilities of universities have changed, research has failed to keep pace (Kezar & Eckel, 2004). What research has been conducted focuses on structure - lines of authority, roles, efficiency, and centralization - and assumes a structure can be created that will help an organization achieve optimal functioning. Scholarship has improved with increasing attention to processes and people, but Kezar and Eckel (2004) argue it would benefit even more with the application of open systems theory. "Scholarship on the responsiveness to the environment or the interplay of various levels of governance is underrepresented and can be illuminated by…open systems theory" (p. 394). It would also help contextualize globalization, the impact of the student or consumer on policy decisions, and the interaction and overlap among departments in an increasingly interdisciplinary environment.

Employee Evaluations

Boyd and Kyle (2004) use open systems theory and critical theory to evaluate performance appraisals in the context of social justice concerns. In other words, they hope to problematize what is viewed as a taken-for-granted, seemingly natural, ahistorical institutional practice. Specifically, they write, "we are most interested in addressing the belief that one's personal life and work life can and should be separated, and the belief that once can be evaluated as an abstract individual fairly, independent of one's race, gender, family responsibilities, etc" (p. 256). People's performance at work is rarely considered in a larger context, outside the boundaries of the organization; by considering an employee's membership in various social groups, and their identification with what they call 'serial collectives', Boyd and Kyle (2004) believe organizations can remedy many of the procedural and distributive justice issues that have plagued the employee evaluation process.

Effective Schools

Griffith (2004) suggests that open systems theory sheds light on the relative effectiveness of secondary schools. Ineffective schools - or those in which student achievement is low - are conceptualized as organizations under stress. Schools operating under stress presumably have fewer inputs, require more effort to transform inputs to outputs, and are less likely to survive. Such schools may have more non-English speaking students, for example, who require more resources to learn. Griffith (2004) found that schools under stress have less permeable, more rigid boundaries, manifested in the form of less parental involvement and less positive school climate. Such schools also experienced more disruption to internal processes. Griffith's research introduces what he refers to as a paradox of organizations under stress - "namely, boundaries are least permeable when the organization most needs information from the external environment" (p. 280). He advocates for future research focused on helping schools maintain healthy boundaries, anticipate and respond to changes in inputs such as enrollment, and identify behaviors of administrators, parents, and students that will best support internal processes.

Viewpoints

Open systems theory, first introduced over a half century ago, has made its mark on multiple disciplines, including organizational psychology and sociology. Even so, it continues to evolve as a conceptual tool. As Scott (2004) argues, changes in the nature of organizations in our lived experience may necessitate changes in theory. "It would be surprising, indeed, if these quite fundamental changes in organizational structure and behavior were not reflected in the conceptions scholars employ to guide their work" (p. 12).

Scott (2004) identifies three major changes in the structure and behavior of organizations - changing boundaries, changing power processes, and changing strategies. Organizations, he argues, have become even more open and flexible than in years past. "Although it seems premature to declare the advent of 'boundary-less' organizations…there are many indicators that boundaries have become more permeable and less fixed" (Scott, 2004, p. 10). Businesses are hiring more temporary workers, for example, and are collaborating with competing firms. Second, organizations have changed the way they relate to their environment in a fundamental way. No longer predisposed to internalize or absorb entities external to the organization - such as technologies, workers, or expertise - organizations are now externalizing, by downsizing and outsourcing. Finally, open organizations are becoming less and less hierarchical, and more decentralized.

Finally, Scott (2004) ponders potential changes resulting from the scattering of organizational scholars across disciplines. As he acknowledges, sociologists especially were "latecomers to the study of organizations," preceded by engineers and industrial psychologists. Relatively soon after establishing themselves within departments of sociology, however, graduates of such programs were hired by professional schools with greater resources. "Concerns are that the work may become more applied - more problem than theory driven. Another concern is that sociologists will forsake some of the broader themes of inequality and power that have long motivated our inquiries" (p. 16). He advises organizational scholars to consider the impact of the environment on their own behavior as scholars, just as they consider environmental impact in the organizations they study.

Terms & Concepts

Boundary: Open systems have more permeable boundaries - inputting and outputting energy and products to and from the environment - than closed systems. Scholars refer to boundary permeability in relative terms - a system is never completely open or completely closed.

Entropy: All living systems experience entropy as part of the natural life cycle. At some stage, the system is no longer able to input or transform energy; the remaining energy dissipates and death occurs.

Equifinality: Open systems can develop in a variety of ways. That is, two systems can reach similar states even though they start under different circumstances, and follow different developmental paths.

Feedback: Open systems receive information or feedback from the environment as well as energy. The information helps the system better understand the environment, and how well it is functioning in relation to the environment. Feedback is a selective process; systems ignore some information and attend to other information.

Input: Open organizations and systems receive inputs from the environment. Inputs take many different forms - oxygen for a cell, for example, or money for a business - but all serve as energy which sustains the system.

Negative Entropy: Systems reverse the entropic process while living by continually importing inputs, or energy, from the environment. Biological systems must inevitably succumb to the entropic process, but social systems can theoretically reverse it indefinitely.

Output: Open systems export a product back into the environment. The ability of the organization to export a product depends, in part, on the receptivity of the environment. If a service or product isn't need, exportation of the output may be stalled.

Throughput: Open systems transform the energy imported from the environment into a product. In other words, some kind of work is done within the system. The body converts calories into heat, for example, while an auto manufacturer transforms raw materials into vehicles.

Bibliography

Boyd, N., & Kyle, K. (2004). Expanding the view of performance appraisal by introducing social justice concerns. Administrative Theory and Praxis, 26, 249-278. Retrieved June 7, 2008 from EBSCO online database, Academic Search Premier http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=14623623&site=ehost-live

Buckley, W. (1967). Sociology and modern systems theory. Englewood Cliffs, NJ: Prentice-Hall, Inc.

Griffith, J. (2004). Ineffective schools as organizational reactions to stress. Social Psychology of Education, 7, 257-287. Retrieved June 7, 2008 from EBSCO online database, Education Research Complete http://search.ebscohost.com/login.aspx?direct=true&db=ehh&AN=17020339&site=ehost-live

Kassner, M. (1989). Open systems theory and women's progress in academe. Journal of Organizational Change Management, 2, 56-67. Retrieved June 7, 2008 from EBSCO online database, Business Source Premier http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=6552543&site=ehost-live

Katz, D., & Kahn, R. (1978). The social psychology of organizations. New York, NY: John Wiley and Sons.

Kezar, A., & Eckel, P. (2004). Meeting today's governance challenges: A synthesis of the literature and examination of a future agenda for scholarship. The Journal of Higher Education, 75, 371-399. Retrieved June 7, 2008 from EBSCO online database, Academic Search Premier http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=13315185&site=ehost-live

Mink, O., Mink, B., Downes, E., & Owen, K. (1994). Open organizations: A model for effectiveness, renewal, and intelligent change. San Francisco, CA: Jossey-Bass Publishers.

Pouvreau, D. (2013). The project of "general systemology" instigated by Ludwig von Bertalanffy: Genealogy, genesis, reception and advancement. Kybernetes, 42, 851–868. Retrieved October 30, 2013 from EBSCO online database, SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=90611171&site=ehost-live

Quilley, S. (2011). Entropy, the anthroposphere and the ecology of civilization: An essay on the problem of 'liberalism in one village' in the long view. Sociological Review, 5965–90. Retrieved date from EBSCO online database, SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=62976878&site=ehost-live

Raeymaeckers, P., & Dierckx, D. (2012). How can we study the integration of networks among human service organizations? Some lessons from organizational sociology. European Journal of Social Work, 15, 484–502. Retrieved October 30, 2013 from EBSCO online database, SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=83933528&site=ehost-live

Scott, W. (2004). Reflections on a half-century of organizational sociology. Annual Review of Sociology, 30, 1-21. Retrieved June 7, 2008 from EBSCO online database, Academic Search Premier http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=13971598&site=ehost-live

Suggested Reading

Gould, L., Stapley, L., & Stein, M. (Eds.). (2001). The systems psychodynamics of organizations: Integrating the group relations approach, psychoanalytic, and open systems perspectives. New York, NY: Karnac Limited.

Hodge, B., & Anthony, W. (2003). Organizational theory: A strategic approach. Upper Saddle River, NJ: Prentice-Hall.

Ramage, M., & Shipp, K. (2009). Systems thinkers. New York: Springer.