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Organization-environment relations

42 important questions on Organization-environment relations

What is according to modernists an organization?

A bounded entity and its behavior is influenced by other bounded entities in its environment.

How would you define an organizational environment?

The external entities and forces which influence the focal organisation's internal operations

Explain the economic exchange model

The economic exchange model describes the exchanges an organization makes with its environment to fuction and survive, without the exchange the organization fails.

The environment both provides the inputs for the organization's transformation process and absorbs the organization's outputs of goods/services.
This absorption generates revenue streams that the organization uses to acquire more inputs. The revenue stream must be sufficient to produce profit

Explain the concept of corporate responsibility/ corporate citizenship

The legal and moral responsibility of an organization towards its community.

Explain the concept of fiduciary responsibility

The legal obligation to protect stockholders' investments. However, this is only a portion of the corporation's responsibility and hence should not be achieved at the expense of the treatment of other stakeholders.

Explain the concept of corporate ethics

The consideration of the organization's potential to do harm (example water pollution from production)

What is the aim of a stakeholder analysis?

Identify stakeholders' actions that may influence the focal organization and find ways to manage their influence.

3 network characteristics can be assessed by measuring the links and the nodes; network centrality&density and structural holes. Explain these 3

Network centrality: measured by the number of network ties (links to a node) and weighing each according to its importance in providing a critical factor

Network density: measured by the concentration of links forming the entire network

Structural holes: identified by an absence of links in a particular area of the network. These holes are of interest as they are an opportunity to gain power and influence.

The external forces influencing an organization can be analyzed by subdividing the environment into 7 sectors, which 7?

Social sector; class structure, demographics, lifestyle, social movements
Cultural sector: history, tradition, norms, values beliefs
legal sector: laws, legal practices
political sector: distribution and concentration of power
economic sector: composed of labour and financial markets
technology sector: the scientific developments and applications that organizations can use to produce outputs
physical sector: natural resources and the effects of nature

The effects of environmental complexity on organization can be explained by two laws, which 2?

1) the law of requisite variety: a part of general systems theory and states that for one system to deal effectively with another, it must be of the same or greater complexity

2) Isomorphism: the convergence between the structures of multiple organizations or the organization with its environment. Isomorphism implies that if the environment is simple, the organization takes a simple form. Complex environments favor complex organizations

3 concepts are used to identify organizational boundaries, which 3?

1) transaction costs
2) power
3) organization identity

Transaction costs.
Where should according to modernists, the organisational boundary be?

The boundary should be defined by their economic exchanges. The boundary should be set by the make or buy decision and should therefore include activities that an organization needs and can make more efficiently and cheaply.

The boundaries aim to minimize these costs.
The limitations of using transaction costs are that they are difficult to measure in reality, rely on efficient market condtions and complicate make or buy comparisons of they change

Where does the resource dependency theory argue that the organisational boundary should be?

An organization's boundary should be set to maximise control over sources in the environment and hence maximize power within their environment. This is because the control of a scare of critical resource provides power that can influence key actors in the organizations environment who depend on the resource.

An additional source of organizational power is the ability to handle uncertainty, the boundary is defined by an organization's sphere of influence which moves strategies to expanding organizational boundaries into new legal territories with mergers and acquisitions

What does the organizational identity defines?

Who is considered an insider of the organization and included in the company's sense of self. Identity is created in subtle ways.

Identity guides what members regard as appropriate within their organization and hence guides strategu formulation, decision making and employee conduct.

The extent to which identity helps or hurts an organization is dependent on its ability to adapt to changes in the environment

What does the structural contingency theory recognises?

There is no single best way to organize. The environment determines the most succesful organizational form because organizations adapt to the environment

The environment determines the most successful organizational form because the organizations adapt to the environments. Therefore this can be assessed in 2 environments stable and unstable

Stable environment: the mechanistic form of organization is ideal because the standard procedures for routine tasks create efficiencies and can hence optimize activities and resources to minimize costs and maximize profitability

Unstable environment: organic form is more effective because it supports the flexibility needed for innovation and adaption

Explain the concept of mechanistic organizational form

High level of centralization, formalization and specialization

Explain the concept of organic organizational structure

Low level of centralization, formalization and specialization

What does an organization need in order to be the most adaptable to its changing environment?

Differentiation between subtasks and integration of the various units produced by differentiation

Explain the concept of environmental uncertainty

The interactions between complexity and rate of change.

Complexity= number and diversity of the elements of the environment
rate of change = how rapidly an environment is changing

What are limitations of the contingency theory is you explain it via environmental uncertainty?

Environmental unncertainty is dificult to objectively measured and can be influenced by different perceptions.

It was realised that uncertainty, instead of being a property of the environment, is the attribution of it and hence was reconceptualized as perceived uncertainty.

Theorists considered perceived uncertainty to be the new key contingency to develop an information theory of uncertainty

Explain the information theory of uncertainty

The information theory of uncertainty argues that perceived uncertainty arises from the amount of information that decision-makers possess when faced with different levels of environmental complexity and rate of change

What are the effects of information on perceived environmental uncertainty?

1. If the information managers need is known and available, they regard the environment as stable and as having minimum complexity

2. Either too much information of information that is inconsistent; regard the environment as high complexity or as rapidly changing

3. Overwhelming amount of information that is constantly and rapidly changing; regarding the environment as highly complex and highly changing and uncertainty is hence the greatest

Explain the resource dependence theory

The resource dependence theory states that the environment determines how power is distributed in and around organizations, and in turn the distribution of power controls the organizational form. The practical implication of the theory is that is can help managers understand and manage the power/dependence relationships that exist between their organization and other network actors and therefore anticipate and offset sources of environmental influence.

Why is an organization dependent on its environment>

Because it needs resources such as raw materials and labour. This dependence gives the environment power over the organization which can use ti make demands, example competitive prices

Explain the population ecology theory

This theory is focued on the environmental level of analysis by studying the patterns of success and failure among organizations competing in a resource pool, referred to an ecological niche. The organization's environment selects from a group of competing organizations that best serve its needs

Explain the concept of variation and selection

Variation occurs as entrepreneurial innovation creates new organizations which provide diversity to the selection process

Selection occurs as organizations that best match the needs and demands of their ecological niche are supported with resources, while those who do not.

What is the difference in organizations survival in the short run and in the long run?

The organizations survival in the short run is facilitated by retention, which is the continuous feeding of resources to the organization.

However, in order to survive in the long run, organizations need to meet the changing environmental demands by continual adaptation and variation.

What is a limitation of the population ecology theory?

The theory applies when the populations are highly competitive, and therefore not all populations meet this requirement.

Explain the neo-institutional theory of organization environment relations

According to neo-institutional theory, organizations depend upon the acceptance of the societies in which they operate. Therefore, the modernist organization theorists added social legitimacy to the inputs in the open systems model of organization. This addition was significant for the symbolic perspective as it acknowledges the importance of human values

The environment places two types of demand on the organization, which 2?

1) Technical, economic and physical demand: that require organizations to produce and exchange their goods and services in a market. This environment reward organizations for efficient and effective supplies to the environment

2) Social, cultural and legal or political demands: that require organizations to play particular roles in society and project a certain outward appearance. This environment rewards organizations for appearing to conform to the values, norms, rules and beliefs upheld by social institutions. In return for conforming to these institutional influences, the organization is given social legitimacy which can aid survival

3 different institutional mechanisms that support the repeated actions of institutional actors

1. Coercive institutional pressures: the pressure to conform to expectations comes from governmental regulations or laws

2. Normative institutional pressures: pressure comes from cultural expectations like education and religious beliefs

3. Mimetic institutional pressures: conform by gaining legitimacy by appearing to be like successful organizations rather than being one.

Explain the enacted environment theory

This theory states that although organizational members assume that they can objectively reflect the environment in their analysis and data, the analysis itself creates the environment to which the organization is responding. Therefore, when decision-makers think they are responding to their perceptions of the environment, the are in fact enacting the environment they imagine and anticipate.

If decision-makers acknowledge the complexity and analyzability of the environment, they will use more data and approaches to manage the environment

What is the link between an enacted world and complexity?

In an enacted world, complexity and uncertainty are created as people attempt to monitor and control the environment

What do you do, when you 'equivocate'?

Humans equivocate when they multiply perceived possibilities and then use them to enact contradictory realities, which in turn promotes further equivocation and ambiguity.

How did James March and Johan Olsen define organisational ambiguity?

'a strategy for suspending rational imperatives toward consistency (to help organisations) explore alternative ideas for possible purposes' therefore helps organizations adapt to challenging environments

Explain the idea of unified diversity

Unified diversity is the idea that diversity does not prohibit the unification of effort or objectives. Managers produce unified diversity by strategically encouraging multiple interpretations of goals and visions.

Some postmodern organization theorists regard organization theory as emerging during industrialization, what are the three phases of industrialisation?

1) started in british textile factories in which identical machines performed on repating task. The work reflected gender relations in society as men performed other tasks than women.

2) 1850's the factory system began to be used in other industries. This growth was paralleled in systems of social organization and bureaucracy

3) production catches up with and overtakes spontaneous domestic demand. Therefore, capitalism's dependence on economic growth leads to:
- enhanced sensitivity to the consumer and new techniques for stimulating consumption
- internationalization of firms in search of new markets
- new technological developments in industrial firms created by R&D activities

What are features of postindustrial societies?

These are organized around the creation of knowledge and the uses of information. Therefore, the service sector rices and manufacturing declines and communication networks, as opposed to hierarchies increase in importance.

What does boundarylessness epmhasizes?

Learning to accommodate the continuous changes. Boundarylessness extends to the organization's stakeholders as their interests combine with those of the organization because mutual influence

What do postmodernists think about theorizing

Postmodernists dislike theorizing as they believe that all abstractions are value-laden and hence disguise hegemonic intentions.

What is Marx' view on a hegemony?

Hegemony is a form of domination in which interests of the ruling class become the status quo through unquestioning acceptance

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Organisational theory and dynamics

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