Business activities may include different perspectives, objectives, and ways to manage available resources to carry out relevant plans and achieve desired outcomes. Companies can operate in different ways and implement distinctive strategic practices designed to realize their intended objectives. At the same time, while speaking of similarity in a structural format, organizations can be considered systems that differ in basic characteristics and approaches to asset management. Thus, when using Scott and Davis’ (2007) findings, one can note that organizational systems can be rational, natural, and open. Identifying the differences and common features between these systems can help describe the specifics of each of these strategies and highlight their application in traditional business models.
Rational Systems of Organizations
This principle of business activity implies following the basic rules laid down in the entrepreneurial field – the accumulation of profit. As Scott and Davis (2007) argue, “from the rational system perspective, organizations are instruments designed to attain specified goals” (p. 45). Any work of the involved participants, whether they are managers or ordinary employees, is characterized by clearly defined functions that are crucial to perform purposefully and responsibly to achieve the set business objectives. Martins et al. (2021) state that efforts applied at the organizational level are designed to address specific goals, which is a sound practice in the context of entrepreneurship as a field designed to generate and accumulate assets. This approach is consistent with the basic principles of business and emphasizes the purely practical nature of entrepreneurship.
The principle of rationality is adequate in case an organization needs to achieve its goals to maintain the current market position and generate profit as a key aspect that allows it to maintain business. According to Scott and Davis (2007), the activities of many companies may seem vague and affect general entrepreneurial objectives, but in most cases, this perception is skewed. Even if a company does not conduct business based on achieving specific outcomes in a well-defined period, all of its activities, including day-to-day operations, aim to address appropriate objectives, including workflow structuring and resource allocation (Scott & Davis, 2007). Moreover, related sustainability mechanisms are used in most organizations, such as staff education or relevant promotional practices. As a result, even seemingly vague activities can be considered in the context of strategically narrower tasks that are implemented daily.
The idea of rational systems deserves particular attention in the context of the cultural determinants of success, for instance, spiritual aspects. While analyzing the entrepreneurial field, Shojaie et al. (2017) remark that “those organizations which have been considered as rational systems for a long time, currently are going to specify some places to spiritual aspects in organization” (p. 168). This means that business leaders encourage following religious approaches in building the sustainability of their enterprises, which does not correspond to traditional ideas of rationality but allows for addressing a number of positive objectives, for example, uniting staff and eliminating conflicts. As an example, one can pay attention to one of the principles of King Solomon, quoted by Merida (2015): “use wisdom to lead others faithfully and skillfully” (p. 36). This idea means that, from a biblical perspective, control over any work requires rationality, expressed in the totality of wisdom and skills. Therefore, even rational systems of organizations allow for applying spiritual practices, although traditionally, these methods of stimulating entrepreneurial success are not identified with the practical approaches that characterize rationality.
Natural Systems of Organizations
When comparing the natural systems of organizations with rational ones, this is essential to take into account the main distinction – the spectrum of characteristics defining the nature of operational activities. As Scott and Davis (2007) remark, “natural system advocates emphasize that organizations are, first and foremost, collectivities” (p. 67). This, in turn, largely determines the variability of the tasks that businesses set for themselves, including the tools needed to implement these objectives. Unlike rational systems, natural ones allow for interacting with different social circles, which indicates a broader context of entrepreneurial activity and not only the basic tasks aimed at generating profits but also other steps within the framework of working in the market. Scott and Davis (2007) mention both open forms of activity and implicit strategies, such as finding alternative sources of funding through flexible advertising and communication approaches. This nature of business work characterizes natural systems of organizations as broader concepts than rational ones.
The concept of naturalness implies following different practices that do not imply the only possible strategic path and clearly defined framework. Nwabali and Lemabari (2021) draw attention to the support goals that organizations can strive for in an attempt to strengthen their market positions. This way of development is called natural for a reason; in a dynamic business environment, this is difficult to follow only one course, ignoring the potential for growth and development. As a result, organizations behave naturally by demonstrating flexibility and variability in strategies for managing and interacting with other market participants. Contrasting such systems with those prescribed in the Bible, one can assess Merida’s (2015) view that even from a Christian perspective, divine interventions often transcend traditions: “He has power over nature and can step outside the natural order” (p. 196). Thus, in modern realities, these systems can be perceived as more adequate than rational ones.
The aspect of organizational culture deserves particular attention as a criterion that is perceived differently in the context of natural systems. According to Egeberg and Stigen (2021), informal values and norms that businesses promote play a significantly more important role in organizational behavior than persistent and rigid control practices. This is due to the aforementioned flexibility parameter; the more adaptive an organization is, the more likely it is to function successfully in a dynamic business environment and adjust individual operational objectives more quickly. Their social nature is more important than the formal one, which is their basic characteristic and a key definition. Therefore, when comparing the two systems, one can single out sustainability and flexibility as the criteria that distinguish rational and natural approaches, respectively.
Open Systems of Organizations
The analysis of open systems of organizations helps identify more modern and adaptive forms of business inherent in such development models. Scott and Davis (2007) define these systems as those that allow businesses to operate successfully through the introduction of new tools and innovative equipment designed to optimize individual stages of the operational process and combine scientific approaches with high-tech solutions. As the authors highlight, for such systems, the external environment is an important resource that determines the dynamics of development and both general principles of operation and individual steps aimed at improving performance and other aspects (Scott & Davis, 2007). While open systems emerged a long time ago and have evolved as the technology market has been streamlined, one can speak of a relatively recent flowering of such forms of market growth. As a consequence of the significant innovation leap in recent decades, organizations have managed to benefit from a wide range of digital and other advanced algorithms that simplify operations.
The relevant academic background describes the systems of organizations under consideration. Dahlgaard-Park et al. (2018) argue that, in accordance with the systems theory, businesses may be viewed “as organic open systems where everything is interrelated and interdependent within a context of environmental influences” (p. 1116). In other words, external influences are significant drivers to take into account. The use of innovative forms of work through market analysis and performance evaluation allows for optimizing operational processes and, at the same time, creating an extensive communication base for expanding influence and gaining customer recognition. Such objectives correspond to most business development models, regardless of the strategic concepts and tools used in work. Given that open systems help improve individual operational outcomes, their use in today’s enterprises is justified and relevant.
The areas in which open systems are in-demand may be different. Weber and Waeger (2017) mention the social, political, and other environments that businesses actively interact with and support. Unlike the other two types, open systems are initially aimed at variability in their development models. The concept of naturalness allows flexibility, but only if necessary, and the rational concept denies any principles of avoiding well-established development algorithms. Therefore, open systems are the freest forms of entrepreneurship, in which the focus on active interaction with the external environment and different areas is the main characteristic. As a result, a variety of development strategies is acceptable within such growth courses. Thus, of all three systems, open ones offer ample opportunities to adopt the necessary tools and innovative solutions for successful and flexible development in an entrepreneurial environment.
Relationship Between the Systems of Organizations
Despite the aforementioned differences between the considered systems, their synthesis is possible within the same organizational structure, and these models can complement each other, thereby strengthening business opportunities and expanding entrepreneurial potential. Őnday (2018) considers such alternatives as open-rational and open-natural models by focusing on the contemporary implications of these approaches to building business systems. Open models deserve particular attention, which the author analyzes as a core for combined algorithms since, with their help, modern organizations can demonstrate flexibility and benefit from the external environment (Őnday, 2018). These perspectives are crucial in the face of market competition and all types of constraints in the entrepreneurial field. Moreover, according to Scott and Davis (2007), open systems are conducive to adapting alternative forms of development, which are more difficult to implement in the context of rational and natural models. As a result, the operating range of open organizations is wider and, therefore, more transformative.
The arguments in favor of combining open systems with either rational or natural approaches are justified by the assessment of structural and functional capabilities. As Őnday (2018) notes, “open-rational models put great emphasis on the importance of the cognitive processes” while “open-natural models stress interactions between an organization and its set or population” (p. 239). In other words, business owners may adopt the necessary approach based on specific development objectives or other criteria, such as the share of available assets or the number of employees. As a result, through combined systems, organizations can get more opportunities to implement different operational tasks, largely due to the effective use of intellectual capital and innovative solutions. Failure to combine at least two of the three models may indicate a weak entrepreneurial capacity of the firm, which is unlikely to function successfully without clear plans, supporting resources, or access to technological developments.
Along with open systems as the main links for successful model synthesis, closed organizational forms also exist. Őnday (2018) defines them as internal strategies that can also be combined with rational and natural systems but that do not use the resources of external environments. Both open and closed systems have become the background for theoretical concepts that are based on socio-psychological (Taylor’s model vs. March & Simon’s model), structural (Fayol’s model vs. Lawrence and Lorsch’s model), or ecological (Ouchi’s model vs. Hannan & Freeman’s model) types of analysis (Őnday, 2018). All of these concepts involve relevant business perspectives and development features, which suggests that the systems in question are united by the common idea of optimizing organizational capacity and improving operational outcomes. As Scott and Davis (2007) state, despite the demand for open systems, rational and natural ones have not disappeared and remained effective for some businesses. Therefore, a successful combination brings together all three models and allows for utilizing alternative strategies to strengthen entrepreneurial activities.
Organization systems analysis is a broad topic that can be studied from different perspectives and through distinctive concepts. In my opinion, open models are the most advanced and sought-after entrepreneurial algorithms today because businesses compete with each other actively due to dynamic interaction, even in the face of current constraints caused by the COVID-19 pandemic. Open systems allow for applying a wide range of resources, which can be allocated to appropriate needs by utilizing corresponding control practices. In addition, studying the aforementioned models is a promising area because, according to Scott and Davis (2007), even in industrial psychology, which is designed to evaluate various organizational settings and their manifestations, specialists do not aim to consider businesses systematically. In this regard, I consider it appropriate to draw attention to Wayne Cordeiro’s statement, as cited by Merida (2015): “the only way to finish strong will be to first replenish your system” (p. 152). Thus, I am sure that evaluating organizations’ systems allows for highlighting the key nuances that affect development, determining the necessary resources to utilize, and establishing a mode of operation optimally suited to specific objectives that can strengthen entrepreneurial activities.
The considered rational, natural, and open systems of organizations are models that are based on distinctive strategies of operating activities and different methods of utilizing available resources for development. In the modern business sector, open models are the most flexible and in-demand; natural algorithms are based on the perception of firms as collectives pursuing support goals; rational strategies are the least flexible and require strict adherence to a specific plan. Despite the differences, the systems can be used in combination, for instance, in open-rational or open-natural forms. Corresponding theoretical concepts make it possible to describe the systems inherent in the structure and functioning of organizations and interpret the opportunities for developing entrepreneurial potential in a distinctive way.
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