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[45] How the management tasks described above are prioritized and performed, and how the corresponding questions are answered, depends not only on the environmental context but foremost on the type of organization. Various criteria (Figure 1-16) can be used to typify organizations (based on Rüegg-Stürm & Grand, 2020, p. 36; Thommen, Achleitner, Gilbert, Hachmeister, & Kaiser, 2017, p. 25).

Figure 1-16: Various Criteria and Their Categories Used to Typify Organizations

Source: based on Rüegg-Stürm and Grand (2020, p. 36); Thommen et al. (2017, p. 25)

[46] The type of organization and, above all, its economic (i.e. profit) orientation, significantly impacts the performing of management tasks and the force fields arising in the process. This is exemplified by the weighting of individual stakeholder interests.

Besides the differentiation according to the dominant environmental sphere, distinguishing organizations by profit orientation — “for profit” versus “not for profit” — is very important. Private companies seek profit, mostly directly or indirectly. They use their profit to compensate the risk capital needed, for example, to pursue risky innovation activities (e.g., when listed pharmaceutical companies research, test, and launch new drugs). Nonprofit enterprises mostly pursue social goals (e.g., NGOs operating in the field of development strive to combat poverty, while private foundations promote cultural projects). Not-for-profit companies are often financed by return on capital and donations, but also by their service fees (e.g., project services) or subsidies. In order to raise funds, they must document their success in attaining their goals in order to attract potential funders. For example, in 2019, the Bergwaldprojekt foundation had a total of CHF 1,726,754 in donated funds, which it invested in mountain forest conservation projects for 12,275 working days (Varinska, 2019).

Cooperations between public and private organizations are called “public-private partnerships.” Typically, such organizations often involve profit-seeking and nonprofit-seeking companies coming together. For example, the cooperative members of the Swiss Society for Hotel Credit include the hotel industry, the banking sector, the federal government (the most important member), and individual cantons. The Society grants subordinated loans to promote the hotel industry in regions with seasonal tourism. Such loans are granted in the interests of the public sector (i.e., the regions benefiting from funding), or of the hotel industry and the lenders.

Another important typification structures companies according to size. Large companies are usually more differentiated and have various management levels, whereas microenterprises (e.g., startups) are often managed directly and personally by a team. Thus, the management structure, management culture, and degree of formalization of management vary greatly — and also result in differences between the flexibility and agility of companies.

[47] The different legal forms of organizations provide different conditions for financing and growth, but also imply different requirements for management structure. While a simple partnership is usually managed by the owners, corporations are characterized by the separation of ownership and management, thus placing special demands on corporate governance. In most countries and cases, stock corporations have a two-tier system, in which a board of directors/supervisory board represents the owners/stakeholders while executive directors/management/board of directors run the company.

Figure 1-17: Typical Phases of Company Formation as an Example of a Possible Corporate Cycle

Source: Grichnik, Brettel, Koropp, and Mauer (2017, p. 239)

Today, the distinction by phase in the business cycle is also important. Thus, newly founded companies can be distinguished in terms of different start-up phases (Figure 1-17). While direct management (by the founding team) is possible both in a preparatory phase and immediately after a company’s founding, management will need to be transferred to more formal structures as the company grows. Whereas in the founding phase, for example, the founding team selected personnel itself, thus enabling selection to match personal values, this task is later performed by a specialized HR department.

[48] Thus, the demands on management, management structures, and managers vary depending on the type of company. However, companies change their structure not only through endogenous development processes, but also through interactions with other companies, including cooperation, consortia, strategic alliances, joint ventures, and mergers (Figure 1-18).

Figure 1-18: Forms of Corporate Ties

Source: based on Thommen et al. (2017, p. 35)

Chapter 1: Key Points

– [49] Integrative management is necessary to deal with complex management tasks.

– Classical management theory assumes that business studies should provide insights that support management and managers.

– The trend toward more scientific approaches in business studies led to a differentiation into functional subdisciplines (e.g., human resources and marketing), and to specialization according to management functions.

– Efforts to overcome the resulting “silos” brought forth various approaches, including systems-oriented management concepts.

– A systems approach helps to understand management as the reflective design of value creation systems in organizations, which in turn can be understood as socio-technical systems providing services to third parties.

– In its ongoing development, the St. Gallen Management Model (SGMM) provides a mental map, i.e., a model, for classifying and dealing with management tasks.

– Thinking in terms of systems makes it easier to grasp the developmental dynamics of organization-environment interactions.

– Thinking in terms of processes makes it easier to understand complex operations such as projects or service provision.

– Different types of organizations present different management challenges.