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Organisations- og Virksomhedsteori. 3 . undervisningsgang – 18 . februar 2013. Lectures, Spring 2013. The organization and the environment. Constraints. Uncertainty. Environment. Organization. Raw materials and other inputs. Products and services. Inputs. Outputs.
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Organisations- og Virksomhedsteori 3. undervisningsgang – 18. februar 2013
The organization and the environment.. Constraints Uncertainty Environment Organization Raw materials and other inputs Products and services Inputs Outputs Drawing Boundaries Institutionalization Socially constructed beliefs
Defining the organizational environment International environment Level of analysis General environment Environment Organization SBU’s
Stakeholder perspective Regulatory Agencies Customers Unions Suppliers Organization Special Interests Partners Competitors
Stakeholders Figure: Organization with stakeholders and sectors of general environment displayed Figure 1 displays the organization with two layers of environmental entities around it; the network of stakeholders / competitors and the sectors of the general environment. Following the logic implied by the general systems theory, the network of stakeholders / competitors is a subset of the general environment and the organization is a subset of the network of stakeholders / competitors.
International environment and Globalization As soon as an organization begins to expand its activities beyond the boundaries of its home nation, it will interact with regularly with representatives of organizations from other nations – joint venture partners, consumer groups, tariff collecting agencies, tax authorities and licensing agents, to name only a few – and all of these stakeholders will become part of the organization’s network. The international / global environment is not simply ‘another layer of things to worry about’. It represents a fundamental shift in perspective such as shown in the figure . The international environment includes actors that cross national boundaries or operate on a global scale. Trends can appear in different sectors of the international environment, just as they do in the general environment. In this regard, it can be difficult to separate out general and international sector trends and conditions in the overall environment.
Environmental Contingency Theory Burns and Stalker were among the first to argue, that an organization’s structure should be based on the conditions it faces in its environment. They presented one of the first empirical tests of contingency theory showing that, in stable environments, successful organizations specialize in routine activities, with strict lines of authority and distinct areas of assigned responsibility, while in rapidly changing environments, organizations require flexibility and employees are encouraged to apply their skills as needed, fitting into changing work patterns in whatever way they find to be useful. In early environmental contingency theories, uncertainty was presented as a property of the environment resulting from complexity and rate of change. Complexity refers to the number and diversity of the elements in environment. Rate of Change refers to rapidly these elements change. Environmental uncertainty, as this perspective came to be known, was defined as an interaction between various amounts of complexity and change in the environment;
Resource Dependence Theory Resource Dependence Theory was most fully developed by Jeffery Pfeffer and Gerald Salancik who published their ideas in 1978 in their provocatively titled book; The external Control of Organizations, to emphasize their point that the environment is a powerful influence on strategic action. Although resource dependency theory is based on the assumption that organizations are controlled by their environments, these theorists are also suggested how managers could learn to navigate the harsh seas of environmental determination. The basic argument of resource dependence theory is that an analysis of the inter-organizational network can help an organization’s managers understand the power/dependence relationships that exist between their organization and other network actors. Such knowledge allows managers to anticipate likely sources of influence from the environment and suggests ways in which the organization can offset some of this influence by creating countervailing dependence.
Institutional Theory • Philip Selznick, who is regarded as the grandfather of institutional theory, based institutional theory on his observation that organizations adapt, not only to the strivings of their internal groups, but to the values of external society. Elaborating on this idea, Paul DiMaggio and Woody Powell argued that ‘organizations compete not just for resources and customers, but for political power and institutional legitimacy, for social as well as economic fitness’. Environments dominated technical, economic or physical demands reward organizations for efficiently and effectively supplying the environment with goods and services. • Environments dominated by social, cultural, legal and/or political demands reward organizations for conforming to the values, norms, rules and beliefs upheld by social institutions such as government, religion and education. Sometimes actions are repeated because explicit rules or laws exist to ensure their repetition (legal and political influences). Sometimes activity patterns are supported by norms. Values and expectations (cultural influences); sometimes by a desire to be or look like another institution (social influences). Powell and DiMaggio distinguished between these three different institutional pressures and gave them distinctive labels; • Coercive institutional pressures are at work when the pressure to conform comes from governmental regulations or laws • Normative institutional pressures are at work when pressure comes from cultural expectations, for instance via the education of organizational members • Mimetic institutional pressures are at work when one organization has desires to look like other organization and explained these as responses to uncertainty that involve copying other organizational structures, practices or outputs in order to conform to expectations.
Exercise • Please form a group • Read and solve the exam question handed out. • Each group present the results
Agenda for next time • Lecture on Organizational Social Structure; • 2 hours • Please remember to prepare Mary Jo Hatch and NBS Article • Who will take the opportunity of an exam question?
