Your task is to critically analyse the contribution that strategic choice and determinist theories (Resource Dependency Theory; Institutional Theory; Population Ecology) make to our understanding of organisational action. Which perspective do you find most compelling – strategic choice or determinism?
Organisational theory has consisted with various approaches that help to analyse the concept of organisation. The term “organisation” represents as social units of human beings, which are formed to meet the requirement or to fulfil certain goals. Those theories consider various perspectives of rationale system, bureaucratic theory and division of labour and contingency theory (Tomaževi?, Tekav?i? & Peljhan, 2017). An organisation helps individuals to use their strengths for achieving certain goals by working together while achieving this goal can be impossible if they work individually. The chief motive of a business organisation is to deliver goods and services to buyers to receive higher amount of profit. According to some economists, business analysts and academic researchers, this field of study deals with fragmented knowledge and consequently, they have provided various competing theories that help to describe this organisational action. Their theories have focused on dynamic structure of business organisations along with control of decision and distribute power, resist or promote organisational changes and resolve conflict (Anggraeni, Dwiatmadja & Yuniawan, 2017). The new directions of organisational theory has focused on the effect of social organisations on the attitudes and behaviour of individuals along with their individual impacts on organisation based on their respective characteristics to succeed the organisation. Hence, this essay has focused on some strategic choice and determinist theories including institutional theory, research dependency theory and population ecology and their contribution to understand organisational action.
Strategic choice deals with face-to-face workshops for a decision making group. Hence, this strategic choice can be considered as an ongoing process, where the planned management regarding uncertainty plays a significant role. Hence, this choice focuses on the decision- making regarding planning of particular situation (Pisano, 2017). On other side, determinism states about all events that include moral choices, which are entirely determined by previous existing causes. In addition to this, determinism can exclude free will, as it states that humans act according to their will (Costa, Burke & Murphy, 2018). This theory states that the world is completely rational as complete knowledge for any given situation confirms certain knowledge for its future. Hence, contribution of both strategic choice and determinist theories can be understood through analysing some theories, mentioned above. After analysing those theories, the essay can find compelling standpoints between strategic choice and determinism.
To discuss further, this essay can some hypothesis. The null hypothesis (H0) considers that organisation can choose only one option, that is, either strategic choice or determination. In alternative hypothesis (H1), it can be considered that an organisation can chose both strategic choice and determinants to produce in an efficient way.
To prove this hypothesis, some arguments and contra-arguments based on strategic choice and determinism are required. Those arguments depend on environment, decisions, control and market. Environmental determinism discusses about physical environment that influences societies and nations in a particular way. Decision-making helps an organisation to select a certain course of action for obtaining proper outcome.
Institutional theories are based on alternative set of assumptions, which focus on the social construction concept. This means, member of those organisations can understand or perceive internal and external world of organisations, subjectively. Thus, managers can recognize the world in a certain way and can be influenced by social expectations and norms, which in turn can help them to behave accordingly (Williams & Shahid, 2016). Those theories state that the institutional environment can influence formal structures to develop further for an organisation. In early-adopting organisation, innovative structures develop technical efficiency and are legitimized in the working environment. This theory has possessed some basic principles, which can be explained as follows and those can be related with the chief concept of strategic management.
Firstly, organisations cannot be considered as autonomous agents, which intend to maximise economic opportunities. Instead of this, those entities are formed within norms of social web along with expectations, which shape and constraint managerial choice. Those social rules give overreaching frameworks to analyse social situations and this in turn helps to prescribe proper collective behaviours and purposes. Hence, a strategic choice of manager is a restricted work rather a selection that is constrained by social prescriptions (Camagni, 2017). Secondly, those social prescriptions are conveyed to organisations with the help of some agencies like state, consultants, professional institutions, the media, analysts and other sources of beliefs and ideas regarding proper management conduct. Thirdly, through conforming social prescriptions, organisations can secure support, approval of public endorsement, which can increase the legitimacy. Fourthly, social prescriptions can be taken for granted and these are very difficult to refuse or change. Fifthly, organisations from similar field face equivalent social pressure and expectations of conformity and this in turn force them to adopt similar strategies along with managerial arrangements.
Hence, four concepts can be found in this institutional theory, which are autonomy, adaptability, complexity and coherence. These four characteristics may help an organisation to perform any difficult task that measures the degree of institutionalisation. However, these four concepts cannot capture the entire complexity of institutionalisation (DENIS, Ferlie & Van Gestel 2015). Therefore, in this context, two additional concepts, that are congruence and exclusivity are very important to describe.
This theory follows mixed method that considers both strategic choice and determinist theories. This means, the theory has considered elements from both concepts, which in turn implies that some factors are out of the control from the industry and market though it can control its share of the market and its own environment.
Resource dependency theory is concerned with the study of the impact of resource acquisition on organisational behaviour. This theory is based on the principle that a company or a business firm needs to be engaged in transactions with other factors or organisations in its specific environment for acquiring the resources necessary. These transactions have a possibility of being advantageous but there is also the chance of the creation of dependencies that are not advantageous. The resources, which organisations require have the possibility of being scarce and they either might not be easily obtainable or have a chance of being under the control of factors or procedures which are uncontrollable. The unequal exchanges generate the differences in the power, authority and the availability of different resources. In order to prevent such dependencies it is seen that the companies develop strategies that include the consideration of political action, increase in the production scale of the organisation and also the development of links for other organisations. The diversification of products is a strategy, which is responsible for lessening the dependence of a firm on the other businesses and the improvement of its power as well as leverage (Biermann & Harsch, 2017).
It is observed that the organisations typically ensure that their business strategies are adjusted in order to adapt to the variations in the connections of power with other organisations. One of the major assumptions of the resource dependency theory is the impact of uncertainty on the organisational control of relevant resources. The choice of the dependence lessening strategies is also crucial in an organisation. With the increase in the uncertainty and dependencies, the requirement of the links to other organisations also increases. It often happens that the declining profits might lead to expanding business activities by means of diversification or business alliances with other companies. The research utilizing the resource dependency theory has considered the observation of the organisational adaptations to certain dependencies. A certain adaptation comprises of the alignment of the internal organisational elements with the pressures of the environment (Voss & Brettel, 2014). The organisations also try to adapt themselves to the circumstances in order to alter their respective environments. These strategies also contrast hugely with the classic conception of the organisations. These companies basically contrast sharply with the classic conception of the companies. The closed system frameworks put forward the fact that the rational utilization of resources, personal motivation and individual capabilities help in the determination of the organisational success. The open system frameworks give a huge focus on the environmental impacts of the environment, this comprises of other organisational institutions, professions in the state. The organisation is effective to the extent of the recognition of the changes in the environment and its adjustment to the contingences (Drees & Heugens, 2013).
The resource dependency theory is underpinned by the specific idea that the resources are crucial to the success of an organisation and the concepts of access and control over the organisational resources is the major basis of power. Resources are often controlled by the companies, which are not under the control of the organisation that needs them. This means that the strategies need to be considered in a proper manner in order to maintain an open access to the relevant resources. It is seen that the organisations typically build the concept of redundancy into the acquisition of a resource in order to endure that the dependency on single resources is reduced (Rivas, 2012).
There are two different theories which can be applied are strategic choice and determinism. In this connection, it can be said that the resource dependence is a type of strategic choice.
The perspective of population ecology on the organization -environment relations is considered as an alternative to perspective of dominant adaption. Strength of the intertial pressures on enterprise structure recommends application of framework, which depends on competition as well as selection in the population of enterprise. The vital components of this model reflect the environment role to determine survival of enterprise. Selection of different enterprise forms in level of total population of enterprises occur owing to structural inertia that is proposed as major explanation for lack of change (Solé & Bascompte, 2012) opines that the enterprise develop structural inertia, which in turn prevents them from implementing any radical changes. This means that if the inertial pressure is high, adaptive flexibility will be low.
There are several assumptions underlying the population ecology theory, which can be described as follows. Individual enterprise is subject to inertial pressures and thus it does not create any successful variation in structures as well as strategies. One of the main reasons of structural inertia is social conditions that are present at start of every enterprise. These conditions provide various features that are difficult to change. Change in organization occurs at level of population through enterprise births and deaths. However, organizations often do change in radical manner but this transformation might be detrimental to enterprise survivability. Variety of enterprise forms caused by environmental selection cannot be explained without centrality of structural inertia. Although established enterprise carry out structural changes, a phenomenon termed as Newness liability occurs.
In this context, it can be beneficial to describe some criticisms of population ecology theory. There are many criticisms of population ecology theory which are explained below-
Lack of defined constructs- One of the main criticisms of population ecology theory mainly deals with ambiguity as well as lack of defined constructs.Solé&Bascompte (2012)cites that lacking precise construct definition and general conceptualization in this field has been difficult and thus generalizability between various context is less feasible. Few researchers have also argued that criticizing lack of definition is not useful as several constructs, which are applied in population ecology, is utilized in other disciplines.
Problems with application as well as methodology- Criticism also occurs in areas of methodology as well as application that is adopted by scholars of population ecologists. () opines that enterprise forms must be defined within particular research problem. Another perspective by Powell & DiMaggio (2012) states that, enterprise ecology needs highly rigid scientific methodology. Furthermore, another criticism also deals with mechanisms by which selection operates as several population ecology theories seems with indirect selection measurement through enterprise death.
Adaption as well as enterprise change- Alexander (2014) states that population ecology theory is highly deterministic and thereby does not involve voluntaristic approach. Particularly, there has been much reliance on reified notion of business environment. Few enterprise sometimes enact its environments and also apt to neglect internal structures of enterprise.
Density dependence- There has been numerous criticisms relating to density dependence framework. This involves problems with failing to operationalize institutional procedure directly, which are main explanatory resource in density dependence theory. Grimm&Railsback(2013) argues that the competition and legitimation procedure are not studied directly but only these models are tested, thereby connection between competition and legitimation are not effectively made.
Population Ecology of enterprises mainly assumes deterministic positioning by concentrating on different patterns of failure as well as success of enterprises competing for similar resources. Moreover, this assumption of population ecology theory is mainly based on theories of selection, retention and variation from evolutionary theory. For instance, adaption refers to function of the environmental selection. Therefore, the enterprise that survives are those that are adapted to environmental needs under particular environmental conditions. Thus, it can be said that population ecology model is a determinism theory.
The entire discuss states that strategic choice and determinism has interdependency with each other. Hence, null hypothesis is rejected and alternative strategy is accepted (Costa, Burke & Murphy, 2018). Thus, strategic choice or determinism is insufficient if they consider individually as both of these concepts are required to obtain a satisfactory explication.
Conclusion:
Thus, the essay has focused on these three theories after discussing the chief concept or organisation. This theory considers either strategic choice or determinist theories or both. For instance, institutional theory considers both concepts and this in turn applies mixed strategies. On the other side, resource dependency theory states about strategic choice and population ecology deals with determinism. Organisation plays a significant role for performing and developing various goals with the help of some group of people while individual people cannot achieve this target. Moreover, the organisation theory performs their tasks based on some theories that help the managers to take decisions accordingly. The first one is the theory considering institution. According to this theory, an organisation is based on sustainability, where it can convince its consumers about their legitimacy. Moreover, this theory can encourage an individual regarding organisational studies. On the other side, resource dependency theory focuses on the external resources of a particular organisation through analysing those external resources can influence the behavioural pattern of an organisation. Considering resources as chief power, it can be said that external resources are essential factors for an organisation to take both tactical and strategic management. The population ecology, another theory related to organisation, focuses on populations their interaction with environment. Moreover, to conclude that whether these three theories have followed strategic choice or determinism, it is crucial to analyse the concepts of both theories and their characteristics, based on which it can be stated that how these two criteria have influenced these two theories along with their magnitude of influence.
References:
Alexander, E. 2014. How organizations act together: Interorganizational coordination in theory and practice. Routledge.
Anggraeni, A. I., Dwiatmadja, C., & Yuniawan, A. 2017. The role of psychological contract on employee commitment and organisational citizenship behaviour: A study of Indonesian young entrepreneurs in management action. SA Journal of Industrial Psychology, 43(1), 1-9.
Biermann, R., & Harsch, M. 2017. Resource dependence theory. In Palgrave Handbook of Inter-Organizational Relations in World Politics (pp. 135-155). Palgrave Macmillan, London.
Camagni, R. 2017. Regional competitiveness: towards a concept of territorial capital. In Seminal Studies in Regional and Urban Economics (pp. 115-131). Springer, Cham.
Costa, C., Burke, C., & Murphy, M. 2018. Capturing habitus: theory, method and reflexivity. International Journal of Research & Method in Education, 1-14.
DENIS, J. L., Ferlie, E., & Van Gestel, N. 2015. Understanding hybridity in public organizations. Public Administration, 93(2), 273-289.
Drees, J. M., & Heugens, P. P. 2013. Synthesizing and extending resource dependence theory: A meta-analysis. Journal of Management, 39(6), 1666-1698.
Grimm, V., &Railsback, S. F. 2013. Individual-based modeling and ecology. Princeton university press.
Pisano, G. P. 2017. Toward a prescriptive theory of dynamic capabilities: connecting strategic choice, learning, and competition. Industrial and Corporate Change, 26(5), 747-762.
Powell, W. W., & DiMaggio, P. J. (Eds.). 2012. The new institutionalism in organizational analysis. University of Chicago Press.
Rivas, J. L. 2012. Co-opting the environment: an empirical test of resource-dependence theory. The International Journal of Human Resource Management, 23(2), 294-311.
Solé, R. V., &Bascompte, J. 2012. Self-Organization in Complex Ecosystems.(MPB-42). Princeton University Press.
Tomaževi?, N., Tekav?i?, M., & Peljhan, D. 2017. Towards excellence in public administration: organisation theory-based performance management model. Total Quality Management & Business Excellence, 28(5-6), 578-599.
Voss, U., & Brettel, M. 2014. The effectiveness of management control in small firms: Perspectives from resource dependence theory. Journal of Small Business Management, 52(3), 569-587.
Williams, C. C., & Shahid, M. S. 2016. Informal entrepreneurship and institutional theory: explaining the varying degrees of (in) formalization of entrepreneurs in Pakistan. Entrepreneurship & Regional Development, 28(1-2), 1-25.
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