OT

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• Increasingly dynamic environments
• Increasing concentration of economic power
• Increasing interorganizational activities

→ Empirical analysis of organization-environment relations

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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.

1. Dependence
2. Power
3. Interdependence

1. Directly proportional to A's motivational investment in goals mediated by B, and
2. Inversely proportional to the availability of those goals to A outside of the A-B relation

1. the amount of resistance on the part of A which can be potentially overcome by B
2. B's power over A definded as A's dependence on B

Mutual dependence between two parties

• physical
• thechnical
• social
• financial

1. importance of the resource to the organization
2. the extent to which another party has control over the resource

1. Symbiotic interdependence
2. Competitive interdependence

→ types of interdependencies often combined

the output of the one (organization) is input for the other

the outcome achieved by one (organization) can only be higher if the outcome achieved by the other is lower

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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)

informal, low costs, partial solution

• Reputation
• Co-optation
• Strategic alliances
• Merger and takeover

formal, high cost, complete solution

informal, low costs, partial solution

• Collusion and cartels
• Third-party linkage mechanism
• Strategic alliances
• Merger and takeover

formal, high cost, complete solution

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1. Suppliers or customers: vertical integration
2. Competitors: horizontal expansion
3. Organization offering other products: diversification

Interdependence of two industries increases the likelihood that a firm in one industry merges with a firm in the other

→ symbiotic interdependencies

Competition intensity increases the likelyhood of mergers within the same industry

→ competitive interdependencies

The more a firm relies on an unmanageable party the more likely the firm diversifies in other products

→ any interdependencies

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• 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

• 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

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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

1. Variation: randome variation of genes → random mutation
2. Selection: positive/negative selection of mutations → external environment ("struggle for survival")
3. Retention: integration of selected mutation in the gene pool → inheritance

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Why are there so many kinds of organizations?

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

⇒ Attempts at fundamental reorganization of structures increases death rates