so 618 interoganizational relationships

8/2/2019 SO 618 Interoganizational Relationships

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Interorganizational Relationships

Organisational Ecosystems

Resource Dependence

Collaborative Networks

Population Ecology

Institutionalism


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Mavole johnson, 2012

Interorganisational Relationships

Increasing dense web of relationships among organisations

Companies have always been dependent on otherorganizations for suppliers, materials and information

How these relationships are managed is vitally important tothe organization affects:- Structure- Management of the environment

Organizational purpose

Organizations can choose to build relationships in manyways, such as appointing preferred suppliers, establishingagreements, business partnering, joint ventures or mergersand acquisitions

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Principles of Transnational Action /interorganizationalOrganizational relationship

Major restructuration of existing inter-organizational relations will apparently

not be feasible until catalyzed by the next major social crisis (so proposals forchange should concentrate on relations between organizations and not onchanges to organizations).

Concentration of organizational resources is desirable but cannot beachieved by centralized coordination of organizations (unless the alienation of

many potential collaborators is acceptable).Informational links should be substituted wherever possible for organizational

links (since the latter tend to become clogged by personality, procedural andstatus problems).

Participative involvement in programme formulation should replace mobilizedsupport for programme execution.

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Principles of Transnational Action /interorganizationalOrganizational relationship

Organizational flexibility should replace organizational rigidity(to permit more rapid response to new action opportunities and topermit new organizational configurations to emerge quicklywherever required)

Social realities should be considered more important than legaland administration fictions (to permit greater response to action-oriented commitment as opposed to status-oriented procedures)

Meetings of organizational representatives should not bestructured to favour consensus formation in plenary, since it isonly very rarely that delegates come with a mandate to committhe organizational to any course of action (and most of the otherreasons for voting are purely symbolic and a waste of meetingtime)

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Organisational ecosystems

Interorganizational relationships are the relatively enduring

resource transactions, flows and linkages that occur among two ormore organisations

An organisation may be forced into interorganizational relationshipsdepending on its needs and the stability of the environment

Organizational ecosystem is a system formed by the interactionof a community of organisations and their environment

A ecosystem cuts across traditional industry lines

A company can create its own ecosystem it can be a retailer, awholesaler, a logistics company and an information servicescompany

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The Changing Role of Management

Within business ecosystems, manager learn to move beyondtraditional responsibilities of corporate strategy and designing

hierarchical structures and control systems

Rather than trying to force suppliers into low prices orcustomers into high prices, managers strive to strengthen the

larger system evolving around them, finding ways tounderstand this big picture and how to contribute

Co-operation and communication are the key elements this

ties further into stakeholder theory and having the appropriatestructures/people/systems in place to deal with an outsideenvironment where the competition may be collaborators atdifferent times and at the same time!

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Changing Characteristics of InterorganizationalRelationships

Traditional Orientation: Adversarial

New Orientation:Partnership

Suspicion, competition, arms length

Price, efficiency, own profits

Limited information and feedback

Legal resolution of conflict

Minimal involvement and up-frontinvestment, separate resources

Short-term contracts

Contract limiting the relationship

Trust, addition of value to both sides, high

commitmentEquity, fair dealing, both profit

Electronic linkages to share key information,problem feedback and discussion

Mechanisms for close coordination, people on-site

Involvement in partners product design andproduction, shared resources

Long-term contracts

Business assistance beyond the contract

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Interorganizational Frameworks Resource dependence rational ways organisations deal

with each other to reduce dependence on the environment Collaborative networks where organisations allow

themselves to become dependent on other organisations toincrease value and productivity

Population ecology examines how new organisations fillniches left open by established organisations and how a richvariety of new organisational forms benefit society

Institutionalism explains why and how organisationslegitimate themselves in the larger environment and designstructures by borrowing ideas from each other

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International origins

Why the interest in interorganizational collaboration?

- Sharing risks when entering new markets- Mounting expensive new programmes- Reducing costs- Enhancing organisational profile in selected industries or

technologiesCooperative is a prerequisite (condition/requirement) for greaterinnovation, problem solving and performance

Partnerships are a major avenue for entering global markets

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From adversaries to partners changingcharacteristics

Traditional Orientation Adversarial

Suspicion, competition, arms length

Price, efficiency, own profits

Limited information and feedback

Legal resolution of conflict

Minimal involvement and up-frontinvestment

Short-term contracts

Contract limiting the relationship

New Orientation Partnership

Trust, addition of value to both sides, highcommitment

Equity, fair dealing, all profit

Electronic linkages to share key informationproblem feedback and discussion

Mechanisms for close co-ordination, people onsite

Involvement in partners product design andproductionLong-term contracts

Business assistance beyond the conflict

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Population ecology Population ecology focuses on organisational diversity

and adaptation within a population of organisations Population is a set of organisations engaged in similar

activities with similar patterns of resource utilisation andoutcomes

Organisations within a population compete for similarresources or similar customers, such as insurance companiesin the United Kingdom

Innovation and change in a population of organisations takeplace throughout the birth of new forms and kinds oforganisation more so than by the reform and change ofexisting organisations

New organisations meet the new needs of society more sothan established organisations that are slow to change

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Population ecology Why do established organisations have such a hard time

adapting to a rapidly changing environment? Inherent limitations

Heavy investment in plant, equipment and specialisedpersonnel

Limited information Established viewpoints of decision markers The organisations successful history Difficulty of changing corporate culture

True transformation is a rare and unlikely event in the face of allthese barriers

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Organisational form and niche Organisation form is an organisations specific technology, structure,

products, goals and personnel which can be selected or rejected by theenvironment

Each organisation tries to find a niche a domain of unique environmentalresources and needs sufficient to support it

The niche is usually small in the early stages of an organisation but mayincrease in size over time if the organisation is successful. If a niche is notavailable, the organisation will decline and may perish

From the viewpoint of a single firm, luck, change and randomness play

important parts in survival

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Process of Ecological Change The population ecology model assumes that new organisations are always

appearing in the population

The process of change in the population is defined by the principles that occurin stages: variation, selection and retention

Variation new organisations forms continually appear in a population oforganisations some forms may be conceived to cope with a perceived need

in the external environment organisational variations are analogous tomutations in biology and they add to the scope and complexity oforganisations forms in the environment

Selection some variations will suit the external environment better than

others. Some prove beneficial and this are able to find a niche and acquire theresources from the environment necessary to survive only a few variationsare selected in by the environment and survive over the long run

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Process of Ecological Change

Retention Retention is the preservation and institutionalisation of selectedorganisational forms. The retained organisational form may become adominant part of the environment

Variation

Large numberof variationsappear in the

population of organisations

Selection

Someorganisationsfind a niche

and survive

Retention

A few organisationsgrow large andbecome

institutionalised inthe environment

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Process of Ecological Change From the population ecology perspective, the

environment is the important determinant oforganisational success or failure.

The organisation must meet an environmental needor it will be selected out.

The process of variation, selection and retentionleads to the establishment of new organisation formsin a population of organisations

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Strategies of Survival

Another principle that underlies the population ecology model is thestruggle for existence, or competition

In the population ecology perspective, generalist and specialist strategiesdistinguish organisational forms in the struggle for survival

Organisations with a wide niche or domain, that is, those that offer abroad range of products or services or that serve a broad market aregeneralists

Organisation that provide a narrower range of goods or services or thatserve a narrower market are specialists

Specialists are generally more competitive than generalists in the narrowarea in which their domain overlap. However, the breadth of thegeneralists domain serves to protect it somewhat from environmentalchanges

Managers impact on company success often comes from selecting astrategy that steers a company into an open niche in the environment

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Institutionalism Institutionalism perspective describes how organisations

survive and succeed through congruence between anorganisation and the expectations from its environment

Institutional environment is composed of norms andvalues from stakeholders

The institutional view believes that organisations adoptstructures and processes to please outsiders, and theseactivities come to take on rule-like status in organisations. Theinstitutional environment reflects what the greater societyviews as correct ways of organising and behaving

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Institutionalism

Legitimacy is defined as the general perspective that an organisationsactions are desirable, proper and appropriate within the environmentssystems of norms, values and beliefs

Institutional theory concerned with the set of intangible norms andvalues that shape behaviour, as opposed to the tangible elements oftechnology and structure. Organisations must fit within the cognitive andemotional expectations of their audience

The institutional view also sees organisations as having two essentialdimensions technical and institutional. The technical dimension is theday-to-day work technology and operating requirements. The institutionalstructure is that part of the organisation most visible to the outside public

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Institutional Similarity

Organisations have a strong need to appear legitimate Many aspects or structure and behaviour may be targeted towards

environmental acceptance rather than towards internal technical efficiency Interorganizational relationships thus are characterised by forces that

cause organisations in a similar population to look like one another Institutional similarity is the emergence of a common structure and

appearance among organisations in the same field. Isomorphism is the process that causes one unit in a population to

resemble other units that face the same set of environmental conditions This occurs through three ways mimetic, coercive, normative

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Three Mechanisms for Institutional Adaptation

Mimetic Coercive Normative

Reason tobecome similarEvents

Uncertainty

Innovation,visibility

Dependence

Political law,rules, sanctions

Duty obligationsProfessionalism

certification,accreditation

Social basis Culturallysupported

Legal Moral

Example Reengineeringbenchmarking

Pollutioncontrols, schoolregulations

Accountingstandards,consultanttraining

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so 618 interoganizational relationships

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