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OT 2019
OT 2019
1. Variation
Trigger (e.g. new technology) → new business models → startup
2. Selection
- economic efficiency (profitability)
- societal acceptance (legitimacy)
"From an organization ecology perspective, it is the environment which optimizes."
3. Retention
"Knowledge of previously successful forms is institutionalized in the socialization apparatus of societies - schools, families, churches, public agencies - and in cultural beliefs and values defended by dominant organizations and institutions."
7.3 Empirical Studies (exemplary)
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Effect of Size on Organizational Failure
Hypothesis: Liability of Smallness
Small organizations have higher failure rates because of:
- lack of reliability and legitimacy
- difficulty of raising capital
- problems of recruiting and training a workforce
- higher interest payments
- costs of compliance with regulations
Empirical Test: consistent with the argument
Effect of Age on Organizational Failure
Hypothesis: Liability of Newness
Young organizations ahve higher failure rates because of:
- need to learn new roles and create routines
- limited resources
- lack of endorsement (legitimacy)
- costs of compliance with regulations
Empirical test: no effect when size is controlled
Resource Partitioning Model of Organizational Ecology
7.4 Critical Appraisal of Organizational Ecology
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Importance of the Theory (3)
- Explanation of change in population of organizations
- New perspective in organizational research (focus on populations)
- Empirically testable
Critique on Organizational Ecology Theory (3)
- Concept of population is unclear and thus it is difficult to distinguish between populations
- Empirically: Foundation of new companies is not the dominant mechanism of variation, elimination of companies is not the dominant mechanism of selection
- Influence of individuals (e.g. managers) is ignored
Summary: Organizational Ecology as Organization Theory
Module 8: New Institutionalism
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8.1 Core Concepts: Legitimacy and Institutions
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Definition of Institutions
Societal rules or expectations that are taken for granted or treated like "facts"
Definition of Legitimacy
Legitimacy is a generalized perception that structures or actions of an organization conform to the existing institutions
8.2 Institutional Environments and Organizational Structures
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Technical Environment
- Products and services are exchanged through markets
- Organizations strengthen their competitive advantage by effective controlling of work processes
Main Criteria: Efficiency
Institutional Environment
- Demonstrate conformism with institutionalised rules
- This way gain legitimacy and support from the environment
Main Criteria: Legitimacy
Combination of Technical and Institutional Environement
Matrix
Institutional Environment
strong weak
strong bank, hospitals industrial companies
weak psychiatric hospitals, churche restaurant, fitness centers
Technical Environment
Structure of the Argument
Survival of organizations: Organizations, which include in their formal structure social legitimated and rationalized elements, maximize their legitimacy, ensure the flow of resources and so improve their survivability.
Organization Theories
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Module 1: The Pluralism of Organization Theories
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1.1 Introduction
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Two Diffferent Meanings of the Term "Organization"
- Instrumental Meaning
- Institutional Meaning
Instrumental Meaning
something
- is being organized
- = activity
- = function
- has an organization
- = result
- = configuration
Institutional Meaning
something is an organization
example: NGOs, government, school, university, companies, state, family, military, sport club, church, hospital
Which aspects characterize an organization? (4)
- structure
- actor/agency
- environment
- change
1.2 Organization Theory vs. Organization Theories
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Reasons for the Plurality of Organization Theories
Different
- objects of research
- disciplinary approaches
- ideas of theory building (philosophy of science)
Function of Organization Theories: Truth vs. Insight
"insight seeking"
"What will matter is how much insight and understanding can be extracted from the entire constellation of theories"
many theories can be true and they are all providing insight (not the same) = it is good to have different theories
1.3 Organizational Research Paradigms
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Definition of "Paradigm"
"A general perspective or way of thinking that reflects fundamental assumptions about the nature of organizations"
Often several theories within the same paradigm
Fundamental assumptions (2)
- Nature of the society: regulation vs. radical change
- Nature of social science: subjective vs. objective
Paradigms of Organization Research by Burrell and Morgan (Matrix)
Modul 2: Max Weber and the Concept of Bureaucracy
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2.1 Biography and Historical Background
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Max Weber (1864 - 1920)
Significance of this work
- one of the founders of German Sociology (next to Simmel and Tönnies)
- First studies on organizations
Historical Context
- Expansion of capitalism
- Rationalization of the worldview
- Growth of the administrative machinery in public & private organizations
= Rationality: Objectivity, Impersonality, Predictability
2.2 The Concept of the "Ideal Type"
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What is NOT the concept of the "Ideal Type"? (2)
- seeking to be consistent with reality
- to be understood as a normative ideal
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Lernkarten
6.2 Environment-organization interdependence
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Organizational Environment
Organization ends and the environment begins at that point where the organization's control over activities diminishes and the control of other organizations or individuals begins.
Three central concepts
- Dependence
- Power
- Interdependence
Dependence (of A on B)
- Directly proportional to A's motivational investment in goals mediated by B, and
- Inversely proportional to the availability of those goals to A outside of the A-B relation
Power (of B over A)
- the amount of resistance on the part of A which can be potentially overcome by B
- B's power over A definded as A's dependence on B
Interdependence
Mutual dependence between two parties
Types of resources (4) which an organization needs and depends on others
- physical
- thechnical
- social
- financial
the degree of dependence
- importance of the resource to the organization
- the extent to which another party has control over the resource
Two types of interdependencies
- Symbiotic interdependence
- Competitive interdependence
→ types of interdependencies often combined
Symbiotic interdependence
the output of the one (organization) is input for the other
competitive interdependence
the outcome achieved by one (organization) can only be higher if the outcome achieved by the other is lower
6.3 Strategies of Managing Interdependence
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Core Argument of Recource Dependence Theory
Uncertainties of gaining critical resources: associated with interdependence will threaten the organization's performance and survival
→ to survive
General approaches of reducing dependencies
- Avoiding dependencies (stockpile, form contracts, diversification)
- Avoiding control (merger, cooptation, exchange of personnel)
Strategies of Avoiding Control: Strategies of managing symbiotic interdependencies
informal, low costs, partial solution
- Reputation
- Co-optation
- Strategic alliances
- Merger and takeover
formal, high cost, complete solution
Strategies of Avoiding Control: Strategies of managing competitive interdependencies
informal, low costs, partial solution
- Collusion and cartels
- Third-party linkage mechanism
- Strategic alliances
- Merger and takeover
formal, high cost, complete solution
6.4 Exemplary Empirical Study
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Three types of mergers
- Suppliers or customers: vertical integration
- Competitors: horizontal expansion
- Organization offering other products: diversification
Suppliers or customers
Interdependence of two industries increases the likelihood that a firm in one industry merges with a firm in the other
→ symbiotic interdependencies
Competitors
Competition intensity increases the likelyhood of mergers within the same industry
→ competitive interdependencies
Organization offering other products
The more a firm relies on an unmanageable party the more likely the firm diversifies in other products
→ any interdependencies
6.5 Critical Appraisal
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Significance of the Theory (4)
- Conceptualization of organization-environment relations as forms of interdependence with other organizations
- Drawing attention to inter-organizational relations
- Articulation of the concrete strategies available to shape the environment
- Empirically testable
Critique (3)
- Most empirical studies were done at the industry level rather than organizational level
- Unrealistic assumption that managers can objectively assess the value of resources
- The wider networks of power and interdependence are ignored
Summary: Resource Dependence Theory as Organization Theory
Module 7: Organizational Ecology Theory
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7.1 Introduction: Darwinian Evolutionary Biology
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How does the Theory of Evolution Explain the Origin of Species?
Underlying understanding of species
- characteristics of creatures shaped by genes
- creatures cannot change their genes
Unit of analysis: population of creatures (defined by common gene pool)
Starting point of evolution: genes
Three Evolutionary Functions of Biology
- Variation: randome variation of genes → random mutation
- Selection: positive/negative selection of mutations → external environment ("struggle for survival")
- Retention: integration of selected mutation in the gene pool → inheritance
7.2 Organizational Ecology Approach
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Research Question of the Organization Ecology Approach from Hannan and Freeman
Why are there so many kinds of organizations?
Premise of Organizational Inertia
Internal constraints:
- informaiton system
- "sunk costs" by investments
- political constraints
- culture
External constraints
- entry and exit barriers from markets
- limited information on environment
- legitimacy constraints
→ Inertia impedes organizational adaptive changes
→ Inertia ensures that organizations evolve within the bounds of the population
Risks of Attempting Reorganizations
⇒ Attempts at fundamental reorganization of structures increases death rates
Ecology of Organizations
Underlying concept of organization
- organizations have a specific "blueprint" (e.g. business model)
- organizations are inertial, they can hardly change
Unit of analysis
- population of organizations (companies in particular)
- (population defined by common blueprint)
Starting point of evolution: Blueprint (analogously to genes)
Evolutionary Mechanisms in Organizational Ecology
- Variation: new alternative blueprints → new companies
- Selection: positive/negative selection of new blueprints, criteria: profitability and legitimacy → market and societal environment
- Retention: integration and retention of selected blueprints → societal institutionalization and bureaucratic routines
1. Variation
Trigger (e.g. new technology) → new business models → startup
2. Selection
- economic efficiency (profitability)
- societal acceptance (legitimacy)
"From an organization ecology perspective, it is the environment which optimizes."
3. Retention
"Knowledge of previously successful forms is institutionalized in the socialization apparatus of societies - schools, families, churches, public agencies - and in cultural beliefs and values defended by dominant organizations and institutions."
7.3 Empirical Studies (exemplary)
-
Effect of Size on Organizational Failure
Hypothesis: Liability of Smallness
Small organizations have higher failure rates because of:
- lack of reliability and legitimacy
- difficulty of raising capital
- problems of recruiting and training a workforce
- higher interest payments
- costs of compliance with regulations
Empirical Test: consistent with the argument
Effect of Age on Organizational Failure
Hypothesis: Liability of Newness
Young organizations ahve higher failure rates because of:
- need to learn new roles and create routines
- limited resources
- lack of endorsement (legitimacy)
- costs of compliance with regulations
Empirical test: no effect when size is controlled
