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Definitions of Organizations
Social entity, goal directed, deliberately
structured, identifiable boundaries (Daft)
Response to and means of creating value
that satisfies human needs. Embodies
collective knowledge, values, and vision
(Jones) Integration of specialized knowledges into a
common task (Drucker)
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Organizations
Human creations whose operations and
products are results of the ways we govern
them and of the social, institutional, andpolitical structures within which they
operate (i.e., their environments)
Organizations are both products of thesestructures and de-stabilizers of these
structures
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Trends and Tensions in
Contemporary Organizations Small and flexible vs. large and vertically
integrated
Technology as work saver vs. work producer Networks vs. hierarchies
Knowledge workers vs. administrators as powerful
organizational members Manufacturing vs. service
Labor shortages vs. labor surpluses
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Trends and Tensions in
Contemporary Organizations Production of high vs. low wage service
jobs
Job as package of specific duties in specific
time period vs. job as flexible in duties,
time, and space
Need for organizational learning vs. poormemory capacity due to downsizing,
merger, and acquisition activity
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Trends and Tensions in
Contemporary Organizations Globalism vs. nationalism vs. environmentalism
Establishment of strong organizational cultural
values vs. appreciating diversity Multigenerational workplaces: Veterans vs.
boomers vs. GenXers, vs. Generation Y vs.
millennial generation
New technologies vs. old human values (e.g.,
biotechnology, wireless technology)
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Essential Features of Organizations
Open system: input, transformation, output
Subsystems: boundary spanning, production,
maintenance, adaptation, management
Domains: range of products and servicesproduced for serving markets and customers
Environmental Transactions: dealing with factorsoutside the organizational boundaries
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Open Systems View of Organization
Input Output
Raw
Materials
Resources
Transformation
Products
Services
ENVIRONMENT
Organization
Subsystems
Boundary
Spanning
Boundary
Spanning
Production
Maintenance
Adaptation
Management
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Organization-Environment Interface
General factors
Economic
International Political/legal
Technology
Social/demographic
Cultural
Physical/natural
resources
Task (specific) factors
Customers
Suppliers Distributors
Regulatory agencies
Competitors
Unions
Partners
Special Interests
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Environmental Uncertainty
Stability-ChangeDimension
How fast andunpredictably elementschange
Universities vs.telecommunications
Determines howoften you need tocollect information
Simple -ComplexDimension
Number of elementsand their similarity
Family restaurant vs.automobilemanufacturer
Determines whatinformation you need
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Perceived Environmental
Uncertainty Simple vs. Complex Elements
Stable vs. Dynamic Elements
Richness vs. Poorness of Elements
More uncertainty results when
organization has to deal withcomplex, changing, and/or poorquality elements.
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Environmental Uncertainty
Rate of Change
Complexity
Low
High
Low High
Low
Uncertainty
Moderate
Uncertainty
Moderate
Uncertainty
High
Uncertainty
(Information known
and available)
(Constantly need
new information)
(Information
overload)
(Information needs
unknown)
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Theories of Organization-
Environment Relationships Contingency Theory
Resource Dependence
Strategic Choice
Population Ecology
Institutional Theory Transaction Cost Theory
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Contingency Theory
Most effective way to organize is contingent oncomplexity and change in environment
Stable environments: Mechanistic structures
(specialization, formality, hierarchy)
Changing environments: Organic structures
(less specialization, informality, lateral relations)
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Resource Dependence
Organizations obtain scarce andvalued resources fromenvironments
Desire to control these resourcesto minimize dependencies
Processes and transactions usedto obtain resources developdependencies
Balancing act of maintainingautonomy and recognizingdependencies
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Strategic choice
Managers perceive environments
Make strategy and design structure
Re-strategize when changes are
perceived
Managers enactenvironments throughtheir decision-making choices
Since managers perceive differently,
they bring organizations in different
directions
Example: Sears vs. Montgomery
Ward
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Institutional Theory
Societal institutions are powerful forcesfor ensuring control and order
In responding to institutional pressures,
organizations develop isomorphic (similar)
strategies, structures, and systems
Normative, coercive, and mimetic forces
make all organizations look the same
Goal is to obtain social legitimacy Example: banks, universities, discount
stores
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Transaction Cost Theory
Organizations try to reduce monitoring,
negotiating, and governing exchanges withenvironmental elements (transaction costs)
Environmental uncertainty, opportunism,
bounded rationality, small numbersbargaining, asset specificity, and risk levelsincrease transaction costs
Transaction and bureaucratic costs balanced
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What specific adaptation devices
do organizations use? Structural Responses
Develop new positions or units
Boundary-spanning activities
Buffering roles and units
Planning Groups
Forecasting
Management Information
Systems
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Specific Adaptation Devices
Inter-organizational Linkages:
Symbiotic interdependencies
Benefit both organizations
Competitive interdependencies Direct competition for scarce
resources
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Symbiotic Interdependencies
Good reputation
Cooptation
Interlocking
directorates
Strategic alliances
Long-term
Contracts
Equity ownership in
other firms
Joint ventures
Mergers,
acquisitions, and
takeovers
Licensing
Consortia
Marketing ordistribution
agreements
Franchising
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Competitive Interdependencies
Collusions
Signaling
Cartels
Trade associations
Regulatory bodies
Competitive strategic
alliances Networking
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How do we assess if an organization
is effective in its environment?
Goals approach
Official vs. operative goals
Achieving organizational goals is effectiveness
Systems resource approach
Obtaining scarce and valued inputs
Measured by quality and costs of inputs; stock price
and market share
Example: Software firm hires the best engineers with
competitive compensation
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What is organizational
effectiveness? Internal Systems Approach
Innovation and quick response to changes
Measured by decision making time, productinnovation rate, time to get new products to
market, reduction of conflict and motivation
problems
Example: 3M: 25% of sales must come from
products less than 5 years old
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What is organizational
effectiveness? Technical efficiency approach
Ability to convert skills and resources into
goods and services efficientlyMeasured by rate of reduction of defects,
reduction of product costs and delivery times,
increases in customer service and product
quality
Example: TQM processes at Stanley
Engineering
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What is organizational
effectiveness? Stakeholder Approach
Stakeholders are any individuals, groups, or
organizations that have an interest in the firmsactivities and ultimate survival
Internal stakeholders: owners or shareholders,employees, and managers
External stakeholders: customers, suppliers,government, unions, local community, general
public, natural environment
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Managing Stakeholders
Inducements and contributions
balance
Inducements are what the firm
provides for stakeholder Contributions are what the
stakeholder provides for the firm
Firms would like to provide as
little inducement as possible foradequate levels of stakeholder
contribution and vice versa
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Potential for Threat
High
High
Low
Low
Potential for
Cooperation
Supportive
Stakeholder:
Get Involvement
Marginal
Stakeholder:
Monitor
Non-supportive
Stakeholder:
Defensive strategies
Mixed Blessing
Stakeholder:
Collaborative
strategies
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Managing Stakeholders
Managing multiple goals of stakeholders
setting priorities or preference ordering
sequential attention
bargaining and compromise
satisficing
At least minimal satisfaction of all current
stakeholders is organizational effectiveness.
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Total Responsibility
Management Systems Focus is on the triple bottom line:
Economic (profits) Social (people)
Environmental (place)
TRM can be significant source of competitiveadvantage for firms who take the lead in theseinitiatives
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Pressures for TRM
Primary stakeholders: owners, employees,
customers, and suppliers
Secondary stakeholders: NGOs, activists,communities, and governments
Social and institutional pressures and trends:
best of rankings and awards; emerging global
standards (e.g., UNs Global Compact); andreporting/accountability initiatives (e.g., GRI or
SA 8000 or AA1000)
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Three Processes in the TRM
Approach Institutionalizinga vision and set of values
regarding responsible practice through the
enterprise (inspiration) Integration of the responsibility into practice
through strategy, management systems, and
human resource capacity
Improvement and innovation throughmeasurement, feedback systems, and learning and
remediation