15 Organisational Behaviour: Significance and Theories

15.1 What is Organisational Behaviour?

Organisational behaviour (OB) is the systematic study of what people do in organisations and how their behaviour affects the organisation’s performance. The classroom shorthand: OB studies individuals, groups, and structure in their effect on behaviour at work — and uses that knowledge to make organisations work better.

Stephen Robbins and Timothy Judge define OB as “a field of study that investigates the impact that individuals, groups, and structure have on behavior within organizations, for the purpose of applying such knowledge toward improving an organization’s effectiveness” (robbinsjudge2018?). Fred Luthans is more emphatic about its scientific footing: OB is “the understanding, prediction and management of human behaviour in organisations” (luthans2011?).

Three Working Definitions

Author	Definition	What it foregrounds
Robbins & Judge	“A field of study investigating the impact of individuals, groups and structure on behaviour within organisations.”	Three units of analysis
Fred Luthans	“The understanding, prediction and management of human behaviour in organisations.”	Scientific aim
Keith Davis	“The study and application of knowledge about how people act within organisations.”	Application

15.1.1 Three units of analysis

Robbins’s standard layered scheme:

OB’s Three Levels

Level	Concerned with	Topics covered
Individual	Single person	Personality, perception, attitudes, motivation, learning
Group	Two or more interacting	Group dynamics, teams, leadership, communication, conflict
Organisation	Whole system	Structure, culture, change, HR systems

flowchart TB
  I[Individual Level<br/>Personality · Perception ·<br/>Motivation · Learning] --> G[Group Level<br/>Teams · Leadership ·<br/>Communication · Conflict]
  G --> O[Organisation Level<br/>Structure · Culture ·<br/>Change · HR systems]
  O -. influences .-> G
  G -. influences .-> I
  style I fill:#E3F2FD,stroke:#1565C0
  style G fill:#FFF3E0,stroke:#EF6C00
  style O fill:#E8F5E9,stroke:#1B5E20

15.2 Significance / Importance

OB is treated by every textbook as the foundation of effective management. Five practical reasons:

Why OB Matters

Use	What OB delivers
Predicting behaviour	Why people quit, perform, cooperate or resist
Managing diversity	Helping varied workforces work together
Leading change	Diagnosing resistance, building commitment
Designing motivation systems	Translating Maslow, Herzberg, Vroom into pay, recognition, job design
Managing conflict	Reading group dynamics; matching style to situation

Robbins’s caution is also worth remembering: OB rests on systematic study rather than intuition. Common-sense beliefs about people (“happy workers are productive”, “money is the only motivator”) often turn out to be wrong on closer inspection.

15.3 Disciplinary Roots

OB is a behavioural science — it borrows from many disciplines and applies their findings to the workplace.

Six Contributing Disciplines (Robbins)

Discipline	Unit of analysis	Contribution to OB
Psychology	Individual	Personality, perception, learning, motivation, training
Social psychology	Group	Attitude change, communication, group decision making
Sociology	Group, system	Group dynamics, teams, communication, formal organisation theory, organisational culture
Anthropology	Organisation	Comparative values, cross-cultural analysis, organisational culture
Political science	Organisation	Power, intra-organisational politics
Economics	Various	Decision making, performance management, design of incentives

Psychology is the heaviest single contributor at the individual level; sociology and anthropology dominate the group and organisation levels.

15.4 Historical Foundations

Modern OB sits on three legacies that we have already met in Chapter 1.

Three Legacy Streams Behind OB

Stream	Period	Key contribution
Classical / Scientific Management	1880s–1930s	Taylor’s one best way; Fayol’s principles; Weber’s bureaucracy. Largely task focus.
Human Relations Movement	1924–1950s	Mayo’s Hawthorne studies showed that attention and social belonging matter; Maslow’s needs hierarchy; McGregor’s Theory X/Y.
Behavioural Science / Modern OB	1950s–present	Empirical, multidisciplinary; integrates individual, group and system. Argyris, Likert, Herzberg, Schein, Vroom, Robbins.

Three milestones that recur in NTA stems:

Hugo Münsterberg — Psychology and Industrial Efficiency (1913) — often called the father of industrial psychology.
Hawthorne studies (1924–32, Western Electric) — Elton Mayo’s interpretation that social factors dominate physical conditions; the founding moment of the human-relations movement (mayo1933?).
Douglas McGregor — The Human Side of Enterprise (1960) — the Theory X / Theory Y distinction.

McGregor’s Theory X and Theory Y

Assumption	Theory X (pessimistic)	Theory Y (optimistic)
About work	People dislike work; avoid it if they can	Work is as natural as play; people seek responsibility
Motivation	External; coercion and control	Internal; self-direction toward objectives one is committed to
Capacity	Limited; people lack ambition	High; creativity is widely distributed
Implication	Tight supervision, sticks and carrots	Job enrichment, participation, MBO

William Ouchi’s Theory Z (1981) added the Japanese-management blend — long-term employment, consensual decision-making, holistic concern for the employee.

15.5 Five Models of Organisational Behaviour (Davis & Newstrom)

Keith Davis and John Newstrom’s textbook lists five OB models, each defined by the manager’s basic assumptions about people (davisnewstrom2010?).

Five OB Models — Davis & Newstrom

Model	Manager’s basis	Employee’s orientation	What employee gets	Era it dominated
Autocratic	Authority / power	Obedience	Subsistence	Pre-industrial revolution to 1920s
Custodial	Economic resources	Security	Pension, benefits	1930s–1950s
Supportive	Leadership	Job performance	Status, recognition	1960s–1970s
Collegial	Partnership	Responsible behaviour	Self-actualisation	1970s–1990s
System	Trust, mutuality	Psychological ownership	Wide range of needs met	2000s–today

The models describe a progression in management thought, not a strict timeline; many firms still use the autocratic model in places where the work or workforce demands it.

15.6 Three Big Theory Maps for OB

The discipline does not have a single grand theory. Three maps frame most of what follows in this chapter.

Three Theory Maps

Map	What it explains	Anchor authors
Cognitive — content theories of motivation	What inside the person drives behaviour	Maslow, Herzberg, McClelland, Alderfer
Cognitive — process theories of motivation	How motivation works dynamically	Vroom (expectancy), Adams (equity), Locke (goal-setting)
Behaviourist	Observable behaviour shaped by external consequences	Pavlov, Skinner, Bandura

These maps are taken up in the next topic — Individual Behaviour — where the dominant content and process theories are unpacked.

15.7 Practice Questions

Q 01 Definition Easy

Organisational behaviour is best described as the systematic study of:

AProfit and loss in firms
BThe impact of individuals, groups and structure on behaviour within organisations
CManufacturing technology
DMacroeconomic policy

View solution

Correct Option: B

Robbins & Judge's textbook definition. Three units of analysis: individual, group, structure.

Q 02 Hawthorne Easy

The Hawthorne studies are most directly associated with the rise of:

AScientific management
BBureaucratic management
CThe human relations movement
DQuantitative management

View solution

Correct Option: C

Mayo's interpretation that attention and social belonging drive productivity opened the human-relations movement.

Q 03 McGregor Easy

A manager who assumes employees inherently dislike work and need close supervision is following:

ATheory X
BTheory Y
CTheory Z
DHawthorne effect

View solution

Correct Option: A

Theory X (McGregor, 1960) — pessimistic. Theory Y is the optimistic counterpart; Theory Z (Ouchi) is the Japanese-management blend.

Q 04 Theory Z Medium

Theory Z, which emphasises long-term employment and consensual decision-making, is associated with:

ADouglas McGregor
BWilliam Ouchi
CElton Mayo
DAbraham Maslow

View solution

Correct Option: B

William Ouchi's Theory Z (1981) blends US and Japanese management practices.

Q 05 Disciplines Medium

Match the contributing discipline with its primary contribution to OB:

(i)	Psychology	(a)	Power and intra-organisational politics
(ii)	Sociology	(b)	Cross-cultural analysis
(iii)	Anthropology	(c)	Group dynamics and formal organisation theory
(iv)	Political science	(d)	Personality, perception, motivation

A(i)-(d), (ii)-(c), (iii)-(b), (iv)-(a)
B(i)-(a), (ii)-(b), (iii)-(c), (iv)-(d)
C(i)-(c), (ii)-(d), (iii)-(a), (iv)-(b)
D(i)-(b), (ii)-(a), (iii)-(d), (iv)-(c)

View solution

Correct Option: A

Psychology → individual; Sociology → group/system; Anthropology → cross-culture; Political science → power and politics.

Q 06 Davis & Newstrom Medium

Which is not one of the five OB models in Davis & Newstrom's classification?

AAutocratic
BCustodial
CSupportive
DBureaucratic

View solution

Correct Option: D

The five are Autocratic, Custodial, Supportive, Collegial, System. Bureaucratic is Weber's organisational form, not a Davis & Newstrom OB model.

Q 07 Industrial Psychology Medium

Hugo Münsterberg is often called the:

AFather of scientific management
BFather of industrial psychology
CFather of bureaucracy
DFather of human relations

View solution

Correct Option: B

Hugo Münsterberg's Psychology and Industrial Efficiency (1913) is the founding text of industrial psychology. F.W. Taylor is the father of scientific management.

Q 08 Levels Easy

A study of how teams in a software company resolve conflict belongs primarily at which level of OB analysis?

AIndividual
BGroup
COrganisation
DIndustry

View solution

Correct Option: B

Conflict in teams sits at the group level. Personality and motivation are individual; structure and culture are organisational.

Quick recall

OB = systematic study of individuals, groups, structure at work, applied to make organisations more effective (Robbins).
Six contributing disciplines: psychology, social psychology, sociology, anthropology, political science, economics.
Three legacy streams: Classical → Human Relations → Behavioural Science / Modern OB.
Key milestones: Münsterberg (industrial psychology, 1913), Hawthorne (Mayo, 1924–32), McGregor’s Theory X/Y (1960), Ouchi’s Theory Z (1981).
Davis & Newstrom’s five OB models: Autocratic · Custodial · Supportive · Collegial · System.
Two grand theory families to remember for the next topic: content (Maslow, Herzberg, McClelland) and process (Vroom, Adams, Locke); plus behaviourism (Pavlov, Skinner, Bandura).