1. Organizations and Environments

2. Definitions of Organizations
Social entity, goal directed, deliberately structured, identifiable boundaries (Daft)
Response to and means of creating value that satisfies human needs. Embodies collective knowledge, values, and vision (Jones)
Integration of specialized knowledges into a common task (Drucker)

3. Organizations
Human creations whose operations and products are results of the ways we govern them and of the social, institutional, and political structures within which they operate (i.e., their environments)
Organizations are both products of these structures and de-stabilizers of these structures

4. Trends and Tensions in Contemporary Organizations
Small and flexible vs. large and vertically integrated
Technology as work saver vs. work producer
Networks vs. hierarchies
Knowledge workers vs. administrators as powerful organizational members
Manufacturing vs. service
Labor shortages vs. labor surpluses

5. Trends and Tensions in Contemporary Organizations
Production of high vs. low wage service jobs
Job as package of specific duties in specific time period vs. job as flexible in duties, time, and space
Need for organizational learning vs. poor memory capacity due to downsizing, merger, and acquisition activity

6. Trends and Tensions in Contemporary Organizations
Globalism vs. nationalism vs. environmentalism
Establishment of strong organizational cultural values vs. appreciating diversity
Multigenerational workplaces: Veterans vs. boomers vs. GenXers, vs. Generation Y vs. “millennial” generation
New technologies vs. “old” human values (e.g., biotechnology, wireless technology)

7. Essential Features of Organizations
Open system: input, transformation, output
Subsystems: boundary spanning, production, maintenance, adaptation, management
Domains: range of products and services produced for serving markets and customers
Environmental Transactions: dealing with factors outside the organizational boundaries

8. Open Systems View of Organization
ENVIRONMENT
Raw Materials
Resources
Products
Services
Transformation
Output
Input
Organization
Production
Maintenance
Adaptation
Management
Boundary
Spanning
Boundary
Spanning
Subsystems

9. Organization-Environment Interface
General factors
Economic
International
Political/legal
Technology
Social/demographic
Cultural
Physical/natural resources
Task (specific) factors
Customers
Suppliers
Distributors
Regulatory agencies
Competitors
Unions
Partners
Special Interests

10. Environmental Uncertainty
Stability-Change Dimension
How fast and unpredictably elements change
Universities vs. telecommunications
Determines how often you need to collect information
Simple -Complex Dimension
Number of elements and their similarity
Family restaurant vs. automobile manufacturer
Determines what information you need

11. Perceived Environmental Uncertainty
Simple vs. Complex Elements
Stable vs. Dynamic Elements
Richness vs. Poorness of Elements
More uncertainty results when organization has to deal with complex, changing, and/or poor quality elements.

12. Environmental Uncertainty
Rate of Change
Low
High
Low
Uncertainty
Moderate
Uncertainty
Low
(Information known and available)
(Constantly need new information)
Complexity
Moderate
Uncertainty
High
Uncertainty
High
(Information
overload)
(Information needs
unknown)

13. Theories of Organization-Environment Relationships
Contingency Theory
Resource Dependence
Strategic Choice
Population Ecology
Institutional Theory
Transaction Cost Theory

14. Contingency Theory
Most effective way to organize is contingent on complexity and change in environment
Stable environments: Mechanistic structures (specialization, formality, hierarchy)
Changing environments: Organic structures (less specialization, informality, lateral relations)

15. Resource Dependence
Organizations obtain scarce and valued resources from environments
Desire to control these resources to minimize dependencies
Processes and transactions used to obtain resources develop dependencies
Balancing act of maintaining autonomy and recognizing dependencies

16. Strategic choice Managers perceive environments
Make strategy and design structure
Re-strategize when changes are perceived
Managers enact environments through their decision-making choices
Since managers perceive differently, they bring organizations in different directions
Example: Sears vs. Montgomery Ward

17. Population Ecology
Focus is on whole population of organizations (e.g., gasoline stations in Canada; wine industry in California)
Natural selection processes:
VariationSelection  Retention
Unsuccessful organizational forms die out
Environmental determinism

18. Institutional Theory
Societal institutions are powerful forces for ensuring control and order
In responding to institutional pressures, organizations develop isomorphic (similar) strategies, structures, and systems
Normative, coercive, and mimetic forces make “all organizations look the same”
Goal is to obtain social legitimacy
Example: banks, universities, discount stores

19. Transaction Cost Theory
Organizations try to reduce monitoring, negotiating, and governing exchanges with environmental elements (transaction costs)
Environmental uncertainty, opportunism, bounded rationality, small numbers bargaining, asset specificity, and risk levels increase transaction costs
Transaction and bureaucratic costs balanced

20. What specific adaptation devices do organizations use?
Structural Responses
Develop new positions or units
Boundary-spanning activities
Buffering roles and units
Planning Groups
Forecasting
Management Information Systems

21. Specific Adaptation Devices
Inter-organizational Linkages:
Symbiotic interdependencies
Benefit both organizations
Competitive interdependencies
Direct competition for scarce resources

22. Symbiotic Interdependencies
Good reputation
Cooptation
Interlocking directorates
Strategic alliances
Long-term Contracts
Equity ownership in other firms
Joint ventures
Mergers, acquisitions, and takeovers
Licensing
Consortia
Marketing or distribution agreements
Franchising

23. Competitive Interdependencies
Collusions
Signaling
Cartels
Trade associations
Regulatory bodies
Competitive strategic alliances
Networking

24. How do we assess if an organization is effective in its environment?
Goals approach
Official vs. operative goals
Achieving organizational goals is effectiveness
Systems resource approach
Obtaining scarce and valued inputs
Measured by quality and costs of inputs; stock price and market share
Example: Software firm hires the best engineers with competitive compensation

25. What is organizational effectiveness?
Internal Systems Approach
Innovation and quick response to changes
Measured by decision making time, product innovation rate, time to get new products to market, reduction of conflict and motivation problems
Example: 3M: 25% of sales must come from products less than 5 years old

26. What is organizational effectiveness?
Technical efficiency approach
Ability to convert skills and resources into goods and services efficiently
Measured by rate of reduction of defects, reduction of product costs and delivery times, increases in customer service and product quality
Example: TQM processes at Stanley Engineering

27. What is organizational effectiveness?
Stakeholder Approach
Stakeholders are any individuals, groups, or organizations that have an interest in the firm’s activities and ultimate survival
Internal stakeholders: owners or shareholders, employees, and managers
External stakeholders: customers, suppliers, government, unions, local community, general public, natural environment

28. Managing Stakeholders
Inducements and contributions balance
Inducements are what the firm provides for stakeholder
Contributions are what the stakeholder provides for the firm
Firms would like to provide as little inducement as possible for adequate levels of stakeholder contribution and vice versa

29. Managing Stakeholders
Assess importance of stakeholders
Power, legitimate rights, and urgency
Assess potential for threat vs. potential for cooperation
Opportunity, capacity, and willingness
Determine appropriate strategies for managing the stakeholder

30. Potential for Threat Potential for Cooperation Low High Supportive
Mixed Blessing
Stakeholder:
Collaborative
strategies
Supportive
Stakeholder:
Get Involvement
High
Potential for
Cooperation
Non-supportive
Stakeholder:
Defensive strategies
Marginal
Stakeholder:
Monitor
Low

31. Managing Stakeholders
Managing multiple goals of stakeholders
setting priorities or preference ordering
sequential attention
bargaining and compromise
satisficing
At least minimal satisfaction of all current stakeholders is organizational effectiveness.

32. Total Responsibility Management Systems
Focus is on the triple bottom line:
Economic (profits)
Social (people)
Environmental (place)
TRM can be significant source of competitive advantage for firms who take the lead in these initiatives

33. Pressures for TRM
Primary stakeholders: owners, employees, customers, and suppliers
Secondary stakeholders: NGO’s, activists, communities, and governments
Social and institutional pressures and trends: “best of” rankings and awards; emerging global standards (e.g., UN’s Global Compact); and reporting/accountability initiatives (e.g., GRI or SA 8000 or AA1000)

34. Three Processes in the TRM Approach
Institutionalizing a vision and set of values regarding responsible practice through the enterprise (inspiration)
Integration of the responsibility into practice through strategy, management systems, and human resource capacity
Improvement and innovation through measurement, feedback systems, and learning and remediation