Understanding and Managing Public Organizations

Chapter 4Analyzing the Environment of

Public Organizations

General Environmental Conditions

• Technological conditions

• Legal conditions

• Political conditions

• Economic conditions

• Demographic conditions

• Ecological conditions cultural conditions

General Environmental Conditions

• Technological conditions: the general level of knowledge and capability in science, engineering, medicine, and other substantive areas; general capacities for communication, transportation, information processing, medical services, military weaponry, environmental analysis, production and manufacturing processes, and agricultural production.

• Legal conditions: laws, regulations, legal procedures, court decisions; characteristics of legal institutions and values, such as provisions for individual rights and jury trials as well as the general institutionalizations and stability of legal processes.

• Political conditions: characteristics of the political processes and institutions in a society, such as the general form of government (socialism, communism, capitalism, and so on; degree of centralization, fragmentation, or federalism) and the degree of political stability (Carroll, Delacroix, and Goodstein, 1988). More direct and specific conditions include electoral outcomes, political party alignments and success, and policy initiatives within regimes.

• Economic conditions: levels of prosperity, inflation, interest rates, and tax rates;

characteristics of labor, capital, and economic markets within and between nations.

• Demographic conditions: characteristics of the population such as age, gender, race, religion, and ethnic categories.

• Ecological conditions: characteristics of the physical environment, including climate, geographical characteristics, pollution, natural resources, and the nature and density of organizational populations.

• Cultural conditions: predominant values, attitudes, beliefs, social customs, and socialization processes concerning such things as sex roles, family structure, work orientation, and religious and political practices.

Research on Environmental Variations

• Notable contributions to this line of research include Selznick, Lawrence, and Lorsch; Burns and Stalker; and James Thompson

Research on Environmental Variations

• Phillip Selznick

• TVA and the Grass Roots (1966)

• Environmental influences play a crucial role in the institutionalization of processes.

• Values, goals, and rules become firmly established not so much because of efficiency but because of environmental influences.

Phillip Selznick (1966)• Co-optation is “the process of absorbing new elements into

the leadership or policy-determining structure of an organization as a means of averting threats to its stability or existence.”

• Basically, it can mean either shared power and authority or

sharing of responsibility and participation without actual redistribution of power. It usually happens when an organization is “out of synch” with its environment (lack of legitimacy, lack of mobilizing power).

• Often the goal of co-optation is “the sharing of public symbols or administrative burdens of authority and public responsibility, but without an actual transfer of power.” The organization needs to make sure the co-optation doesn't get out of hand. The organization needs participation, but too much participation may threaten leadership (hence the inherent dilemma and tensions).

Significance of Co-optation• Co-optation is significant to organizational

analysis because it represents a change or broadening of leadership. It also tells us that every adaptive structure evolves to meet its basic needs for survival and develops methods of self-defense.

• One can explain organizational behavior by examining the function or structure of the organization in relation to these needs. The organization strives for security and stability of formal and informal relations.

Lawrence and Lorsch (1967)

• They define differentiation as “the state of segmentation of the organizational systems into subsystems, each of which tends to develop particular attributes in relation to the requirements posed by its relevant external environment.”

• They define integration as “the process of achieving unity of effort among the various subsystems in the accomplishment of the organization's task.“

Lawrence and Lorsch

• Organizations must balance differentiation and integration to be successful. Those companies who manage to achieve high sub-unit differentiation and yet still maintain high integration between sub-units seem to be best equipped to adapt to environmental changes.

• Groups that are organized to perform simpler, more certain tasks (such as production groups) usually have more formal structures than groups focusing on more uncertain tasks (for example, research and development).

Burns and Stalker • Through their theory of mechanistic and organic systems, Tom

Burns and G. M. Stalker have provided a way to understand which organization forms fit to specific circumstances of change or stability.

• In their highly influential work “The Management of Innovation” (1961) they provide the characteristics of mechanistic versus organic systems.

• Stable conditions suggest the use of a mechanistic form with traditional patterns of hierarchy, reliance on formal rules and regulations, vertical communication, and structured decision making.

• More dynamic conditions—situations with a rapidly changing environment—require an organic form that is less rigid, is more participative, and relies on workers to redefine their positions and relationships.

Mechanistic Versus Organic

• Tasks are separated.

• Tasks are narrowly defined.

• Has a hierarchy with centralized top-down control.

• Rules are pervasive.• Communication is

vertical.

• Employees contribute to shared tasks.

• Teamwork redefines tasks.

• Is flatter with less hierarchy.

• There are fewer rules.• Knowledge and control of

tasks are located anywhere in the organization.

• Communication is horizontal.

Why Is This Important?

• Essential organization goals or tasks require certain organizational environments.

• The impact of these organizational forms on individuals is different.

• Managers find the mechanistic form provides a greater sense of security when dealing with their environment than the organic form.

• Either form may be appropriate in particular situations.

Contingency Theory• An organization’s structure must be adapted to

contingencies.

• In simple, homogenous, and stable environments, organizations can successfully adopt mechanistic and centralized structures.

• In more complex environments, successful organizations must be organic and less decentralized.

Contingency Theory

• Capacity

• Domain consensus and choice

• Turbulence and interconnectedness

• Stability, dynamism, change rates

Descriptive and Analytic Dimensions of Organizational Environments

• Capacity

• Homogeneity-heterogeneity

• Stability-instability

• Domain consensus-dissensus

• Turbulence

Recent Trends in Research on Organizational Environments

• Population ecology—a deterministic viewpoint. Populations vary because of their environments.

• Resource-dependence: Organizations depend on their environment for critical resources. Organizations exchange to gain resources, which in turn alters the power-dependence dynamic.

• Transaction costs: Make-buy decisions can be examined in terms of the cost of the exchange. All governance forms have unique competencies.

• Studies of institutionalizationo Isomorphismo Coercive isomorphismo Normative isomorphism

Descriptive and Analytical Dimensions of Organizational Environments

Aldrich (1979)• Capacity: the extent to which the environment affords a

rich or lean supply of necessary resources• Homogeneity-heterogeneity: the degree to which

important components of the environment are similar or dissimilar

• Stability-instability: the degree and rapidity of change in the important components or processes in the environment

• Concentration-dispersion: the degree to which important components of the environment are separated or close together, geographically or in terms of communication or logistics

• Domain consensus-dissensus: the degree to which the organization’s domain (its operating locations, major functions and activities, and clients and customers served) is generally accepted or disputed and contested

• Turbulence: the degree to which changes in one part or aspect of the environment in turn create changes in another; the tendency of changes to reverberate and spread

Major Environmental Components for Public Organizations

General Values and Institutions of the Political Economy Political and economic traditions Constitutional provisions and their legislative and judicial development

Due processEqual protection of the lawsDemocratic elections and representation (republican form)Federal systemSeparation of powersFree-enterprise system (economic markets relatively free of government controls)

Values and performance criteria for government organizations Competence EfficiencyEffectivenessTimelinessReliabilityReasonablenessResponsivenessAccountability, legality, responsiveness to rule of law and governmental authorities, responsiveness to public demandsAdherence to ethical standardsFairness, equal treatment, impartialityOpenness to external scrutiny and criticism

Major Environmental Components for Public OrganizationsInstitutions, Entities, and Actors with Political Authority and Influence Chief executives

Executive staff and staff offices LegislaturesLegislative committeesIndividual legislatorsLegislative staff Courts Other government agenciesOversight and management agencies (GAO, OMB, OPM, GSA)CompetitorsAlliesAgencies or governmental units with joint programs Other levels of government“Higher” and “lower” levelsIntergovernmental agreements and districts Interest groupsClient groups Constituency groups Professional associationsPolicy subsystemsIssue networksInter-organizational policy networksImplementation structure News media General public opinion Individual citizens with requests for services, complaints, and other contacts

Major Environmental Components for Public Organizations

• General values and institutions of the political economy

• Values and performance criteria for government organizations

• Institutions, entities, and actors with political authority and influence

General Values and Institutions of the Political Economy

• Political and economic traditions

• Constitutional provisions and their legislative and judicial development

– Due process– Equal protection of the laws– Federal system– Separation of powers

Values and Performance Criteria for Government Organizations

• Competence– Efficiency– Effectiveness – Timeliness– Reliability– Reasonableness

• Responsiveness– Accountability, legality, responsiveness to rule of law

and governmental authorities– Adherence to ethical standards– Fairness, equal treatment, impartiality– Openness to external scrutiny and criticism

Institutions, Entities, and Actors with Political Authority and Influence

• Chief executives

– Executive staff and offices

• Legislatures

– Legislative committees– Individual legislators– Legislative staff

• Courts

Institutions, Entities, and Actors with Political Authority and Influence

• Other governmental agencies

– Oversight and management agencies– Competitors– Allies– Agencies or governmental units with joint programs

• Other levels of government

– “Higher” and “lower” levels– Intergovernmental agreements and districts