In this episode, we read the classic article “Differentiation and Integration in Complex Organizations” published in 1967. Here, Lawrence and Lorsch investigate the relation between organizational characteristics and their environment, and stipulate that an organization’s economic performance is determined by its ability to meet integration and differentiation requirements according to their environment.
The paper is based on a comparative study of six industrial organizations and data was obtained via questionnaires and interviews with senior executives. The researchers compare the degree of integration and differentiation between subgroups in each company as they attempt to meet requirements from their respective sub-environments. The paper shows that the most economic successful organizations were the ones that managed to fulfil the dual goal of differentiation and integration. Finally, the authors explore the conditions that lead to more or less effectiveness in integrative devices.