Organizational Ecosystems, Resource Dependence andPopulation Ecology

1Agenda Organizational ecosystems Changing role of management Inter organizational framework Resource dependence Collaborative networks Population ecology Institutionalism

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Interorganizational Relationship Relatively enduring resources transactions flows, and linkages among two or more organizations T to M8/2/2014TAPMIOrganizational Ecosystem System formed by the interactions of a community of organizations and their environment. The analogy of an "ecosystem" is used to describe the increasingly dense web of relationships among organizations. Relationships among large firms in the information industry illustrate the notion of organizational ecosystem.

8/2/2014TAPMIAn Organizational Ecosystem

8/2/2014TAPMIIs Competition Dead James Moore has noted a trend of decreasing competition in the traditional sense and increasing cooperation across organizational and industry linesHow change in environment has affected role of management

Source: Chrysler (Daft 6the p. 523). Chrysler transformed supplier relationships from adversarial to cooperative by eliminating supplier bidding and emphasizing long-term contracts8/2/2014TAPMIChanging Role of Management Evolution from top down management (concerned with the vertical hierarchy) toward horizontal management (concerned with relations across organizational boundaries, including customers and suppliers)

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Resource Dependence ApproachOrganizations try to minimize their dependence on other organizations for the supply of important resources and try to influence the environment to make resources available.Dependence on a resource is based on:importance of the resource to the organizationhow much discretion or monopoly power suppliers of resource have over its allocation and useResource Strategies: Strategies available to organizations to minimize resource dependence

8/2/2014TAPMICollaborative NetworksTendency of companies to join together to share scarce resources and be more competitive. Alternative to resource dependency1. International Origins of Collaborative Networks

Mitsubishi (Daft 6the p. 530). Prime example of a keiretsu involving hundreds of companies connected through ownership, long term contracts, interlocking directorates, etc. Toyota (Daft p. 174) Relates how production in Toyota factories had to be shut down after a fire destroyed the only supplier of a critical brake valve. In a short time 50 companies part of Toyota's keiretsu were able to retool to restore production of the valves.

8/2/2014TAPMICollaborative Networks2. From Adversaries to PartnersCollaboration trend in U.S. began in non-profit sector (social service and mental health organizations) and later spread to profit sector; Empire Equipment; VolkswagenEmpire Equipment Co. (Daft p. 176). By using close technical collaboration with a supplier of filters and long term contracts Empire succeeded in reducing the cost of that component.Volkswagen (see Daft p. 177). Plans for a VW assembly plant in Brazil illustrate an advanced partnership leading to "co-production" or a "modular consortium" involving 12 final assemblers of components; the ultimate collaborative network!

8/2/2014TAPMIInterorganizational Relationships

8/2/2014TAPMIPopulation EcologyAlso known as organizational ecology, Organizations are subject to a lot of inertia that prevent them from adapting quickly to environmental fluctuations, and they often do not have enough information to adapt optimally (because of bounded rationality).The process of change in a population of organizations is based on mechanisms of competition among organizational forms that can be described by a model of variation-selection-retention analogous to the theory of evolution by natural selection in biology

8/2/2014TAPMIBounded RationalityBounded rationality is the idea that in decision-making, rationality of individuals is limited by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make a decision. It was proposed by Herbert A. Simon as an alternative basis for the mathematical modeling of decision making, as used in economics, political science and related disciplines8/2/2014TAPMIProcess of Ecological Change

8/2/2014TAPMIVariations, Selection, RetentionVariations means the appearance of new, diverse forms in a population of organizations. These new organizational forms are initiated by entrepreneurs, established with venture capital by large corporationSelection refers to whether a new organization form such as Axiom is suited to the environment and can surviveRetention is the preservation and institutionalization of selected organizational forms. Certain technologies, products and services are highly valued by the environment8/2/2014TAPMIInstitutionalismInstitutional PerspectiveHow organizations survive and succeed through congruence between an organization and the expectations from its environmentLegitimacy - appropriateness of an organization's actions within system of norms, values, and beliefsInstitutional environment - norms, values, and beliefs of stakeholders (including government)

8/2/2014TAPMIInstitutionalismInstitutional Isomorphism(= emergence of a common structure and behaviors among organizations in the same field)Mechanisms of institutional isomorphism:mimetic isomorphism; EX: fads and fashions, "benchmarking"coercive isomorphism; EX: government regulationnormative isomorphism; EX: "smoke free events", accounting standards

8/2/2014TAPMIInstitutionalism

8/2/2014TAPMIKeiretsuA keiretsu (?, lit. system, series, grouping of enterprises, order of succession) is a set of companies with interlocking business relationships and shareholdings. It is a type of informal business group. The keiretsu maintained dominance over the Japanese economy for the last half of the 20th century8/2/2014TAPMIThank you!8/2/2014TAPMI