Efficiency, Efficiency, Everyhwere Efficiency: From a Linguistic Detail to a Paradigm in Organization Studies

This reflection essay is authored by Fabian Lugert and Richard Kempert, students in the master program Organization Studies at University of Innsbruck.

As students of Organization Studies, we often find ourselves in discussions, less often they get as intense as the one we had over the meaning and performativity of the word efficiency. This was challenging for us, because we constantly get confronted with the terms “efficiency”, “efficient” or “inefficient”. Subjectively perceived the word stem is used in every paper we read, which is not surprising as it is widely used and variable in its use. The most general definition of “efficiency” seems to be “doing the things right” (Drucker 1963). Other sources differ in their explanations. For example, the Cambridge Dictionary defines it as “the good use of time and energy in a way that does not waste any” (Cambridge Dictionary “Efficiency”). Another explanation provided by the dictionary: efficiency is “a situation in which a person, company, factory, etc. uses resources such as time, materials, or labor well, without wasting any” or “a situation in which a person, system, or machine works well and quickly” (Cambridge Dictionary “Efficiency”).

Following the various definitions, efficiency is strongly linked to organizational success. How efficient an organization is derives from achieving the respective organizational goals while using as few resources as possible. Understanding the statement “organization A is efficient”, involves an idea of what the organization A wants to achieve. For example, if a random organization aims at maximizing their profits it is efficient, in case it has a high turnover with low production costs. But if the aim of the company is to maximize the satisfaction of all employees or stakeholders, a totally different usage of resources is necessary to be efficient in this sense. The same applies to other aims like: maximizing their eco-efficiency, minimizing their environmental impact or whatever goal the company is aiming at. To put it in a nutshell, the statement “the company is efficient” can mean a lot of things.    

The description shows that for a precise and/or unequivocal efficiency statement further information is necessary. Omitting the clarification, the recipient has to interpret the meaning based on the context, which includes the risk of misinterpreting the dimensions and/or goals of the respective “efficient”.

It is exactly this different interpretation of the use of the term efficiency that has led the authors to write this essay. Our divergent interpretations cropped out in discussions, which occurred during breaks in lectures. What is this efficiency, we are always referring to?! Discussions got intense and positions from a stubborn “OUTPUT-efficiency” to more differentiated perspectives developed. We decided to take a closer look at the basic literature we read during our first semester to get a more comprehensive picture of how efficiency is used in Organization Studies research. This made the thing even more obscure…

To lay our perceptions on a fundamental basis, we picked four papers from the syllabus at which our discussion broke out. We analyzed them regarding their use of “efficient”, “efficiently” and “efficiency”. Two papers focusing on neoinstitutionalism in particular: Meyer and Rowan – Institutionalized Organizations: Formal Structure as Myth and Ceremony and DiMaggio and Powell – The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields, one paper from Ahuja tackles the topic of networks  with the title Collaboration Networks, Structural Holes, and Innovation: A Longitudinal Study and the last one defends Weber’s idea of bureaucracy from DuGay – In Praise of Bureaucracy, Chapter 2 and 3.  In total, the word stem was used 53 times.

In only two cases out of the 53 times, the author used it in a differentiated way. In these cases, we got provided with a context. For example, in one paragraph DuGay highlighted that he means efficiency in a wider understanding by mentioning, that one dimension is “ […] i.e. economic […]” (DuGay 2000, p. 77). In the other case, Ahuja provided the context by highlighting the goal (“maximizing network benefits”; Ahuja 2000, p. 448). Analyzing the remaining 51 occurrences of the word, we sat together and continued our linguistic argument. “This means output efficiency!” “No, it doesn’t, as it is not clear” “Yes!” “No!”

While turning in circles we realized that the argument wasn’t solvable, since both of us had a valid point.* 

The overarching use of “efficiency” without any contextualization indicates an implicit, general agreement on the context and aim of organizations, otherwise the words are just there to fill space. While we were discussing each of the 51 unclear uses of the word stem we realized that our first interpretation in each case was “output-related” although the corresponding passages did not provide clear information for this interpretation. This pattern made us suspicious.  Is there an underlying understanding in the field of Organization Studies how to use the term “efficiency”? In other words: is there a tacit/obvious consensus as to what the aim of organization is and therefore no need for specification?
The small our linguistic discussion and the limited resources of our analysis were, the bigger was the hint in which paradigm Organization Studies sticks. What we called “output-efficiency” refers to goals as profit maximization or high input-output ratio which are commonly the main goals of companies operating in capitalistic systems. By agreeing to the understanding of efficiency the authors show us at least two things. First, their focus and interest lay in organizations in the form of companies, which act in liberal markets. Second, the authors accept that with the imprecise usage of the term they reinforce this paradigm.

This short analysis combined with our perceptions is no evidence, that Organization Studies, as a rather heterogeneous and complex field, is in the paradigm of the overriding goal of profit maximizing. Although we would argue that the analyzed papers are parts of the smoking gun. The linguistically unclear use of efficiency in the papers and the realization, how difficult it was for us to analyze the use of the term more objectively without falling back to the agreed interpretation, support this view. Remembering the first lectures in Organization Studies, we got told that organizations are way more than profit-oriented companies. They are everywhere, and we are mostly not even aware of them. Relating to this thought some questions arise:

  • Can this predetermined focus on profit-oriented organizations meet the challenges of the diversity of organizations we deal with today? Or do we maybe misinterpret the authors in their use of efficiency and in their focus?
  • Does a mainly economically driven perspective on organizations not excluded important and interesting insights and perspectives from the beginning?
  • Is the capitalistic system logic and the strategic management perspective so taken for granted that it is no longer questioned?
  • Can a research field call itself Organization Studies when it is only interested in a small part of organizations?

These questions are provoking and polarizing as we hope to provoke some comments and interactions on this text.

To sum it up: The discussion we got stuck in, which was the reason for this essay, about the performativity and meaning of the term “efficiency” could be settled neither in favor of any of us, nor in general. But the process of our debate and the attempt to clarify our discussion led to a deeper confrontation with our research field and the underlying assumptions and paradigms which we assign to it. Although this is no answer to the initial question, we  hope that it is a contribution to the discussion about the perceived need of every organization to be “efficient”. This is already taking place in the scientific community, and we hope that this discussion will gain more attention in the lecture halls.

So, we stand -again- at the beginning of another intense argument…

* In case you are interested in the complete analysis table, you can find it here as PDF download.

Internet sources:

Cambridge Dictionary “Efficiency”

References:

Ahuja, G. (2000). Collaboration networks, structural holes, and innovation: A longitudinal study. Administrative science quarterly, 45(3), 425-455.

DiMaggio, P., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review 48(2), 147-160.

Drucker, P. F. (1963). Managing for business effectiveness. Harvard Business Review

DuGay, In Praise of Bureaucracy 2000, 35 – 80.

Meyer, J. W. & Rowan, B. (1977) Institutionalized Organizations: Formal Structure as Myth and Ceremony. In: DiMaggio, P. J. & Powell, W. W. (Eds.). The New Institutionalism and Organizational Analysis. Chicago: University of Chicago Press, pp. 41-62.

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