An assembly of people who work together to accomplish a common goal is called, in simple term, an organization. Organizational theory refers to the set of concept found inter-related to each other and definitions that are capable of explaining individual or group behavior in an organization interacting with each other to perform activities intended to achieve a common goal (Lyons & Kuron, 2014). Organizational theories are based on the relationship between the individuals or groups in the organization and their effect along with actions on the organization as a whole (George & Wilding, 2013). Also, the theory studies the impacts of external and internal environment of the business which usually involves political, social, cultural and legal factors on the organization. For many years economists have devoted their attention in studying the characteristics of various organizations. Organizational theory includes the strategies and methods that are required to achieve the goal of the organization. This essay examines the two of the contributing factors needed to make understanding of organizational actions. Also, the essay examines the better perspective that is compelling the organization. Firstly, the essay discusses the different forms of organizational theories, strategic choice and determinist theories. Secondly, the essay discusses the perspective that is most compelling. Lastly, it gives a holistic view of the essay.
Strategic choice theory: The choices made by the leaders are made in a dynamic political process. The theory was developed during the time of America was faced with changes in the industrial relation. The theory is based on examining the external environment and identifying the forces that could be responsible for the changes in employment relation (Jones & Jones, 2013). Often any changes arising in the external environment invoke employees to bring change in their competitive business adjustment. Therefore, the external forces are taken into consideration while the leaders make decisions. The theory primarily focuses on the importance of administration choices on organizational performances. John child discusses regarding strategic choice’s role in the organizational structure, its environment and its performance. According to him, to only consider the environment, technology and size overlook the internal aspects of the people within the organization and the choices made by them. He also pointed out to seven important concepts related to it. The seven concepts are: Domain, boundaries, goals and actions of decision-makers of the decision makers and dominant coalition. Also, John child thinks the critical relation between them lies in the decision maker’s evaluation of organization’s position in term of environmental area, they consider significant and make decisions internally.
Determinist theories can be defined as any theory that every events involving moral choices entirely determined by previously causes existing in that aspect. According to organization’s structure, the determinist theory emphasizes that the market place is more or less controlled by itself. Therefore it is the business who is compelled to change as per the changes in the market. Organizations need to constantly be aware of the changes occurring in the market, the occurring trends and the market demands. The overall market place, industry and social environment are the factors organizations need to determine.
Various analysis and literatures have argued regarding the importance of the environment in the organizational literature. Resource dependency theory, institutional theory and population theory are few of the theories that attempt to provide explanation regarding the relationship existing between organizations and its environment. Three different theory presents different perspectives, resources dependence theory explains the interaction between organization and its environment, the institutional theory explains the reasons organizations molds itself as per the market or the institutional environment and lastly, the population ecology examines the reason organizations fail while other achieve the top of success.
Resource dependency theory: resource dependence theory is specifically a theory that addresses the ways organization interacts and communicates with its environment. It is essential for organization to interact with the external environment of the organization. It is necessary to obtain the resources and information for the organization’s goal. The principle on which an organization get involved with other organizations in its environment in order to acquire resources. Although there are benefits of interacting with other organizations, it can also create dependencies not suitable for the organizations (Kozlenkova, Samaha & Palmatier, 2014). Resources which organizations seek to mainly might be scarce, not always available or under the any uncooperative actors. Resources are important for organizations and it is the resources that compel the organizations to build relations with the other organizations. Often the relation is advantageous however, it may turn other way depending on various factors existing in the external environment. The unequal exchanges generate difference among different organizations in power, authority and access to further resources. To avoid such dependencies organization develop organizational strategies including internal and external environment. These strategies are developed to enhance the bargaining position in the resource-related transactions. The strategies are developed using the political actions and considering the organization’s scale of production, developing skills, diversifying and other important factors. Organizations typically adjusts their strategies as per the changes in the environment and to gain power relationships with other companies. It is important to mention that one of the assumption of resource dependency theory uncertainty can cause an organization to lose control of company or even gain power of the resources. Often usage of resource dependency theory has sought to observe adaptation of organization to dependencies. It can be an adaptation consisting of aligning organization’s elements with environmental pressures. Organizations also adapt the dependencies by attempting to alter and change their environment. These kind of organizational strategies contrast with the classical conception of organizations that are found treating organizations as a closed systems. In the framework of closed systems the main elements are rational use of resources, individual capabilities and personal motivation that decide organization’s success. On the other hand, open-systems framework emphasis on the impacts of the environment, which involves other organizations, professions, institute and state. According to the perspective of open-systems, an organization will be able to be effective only to the extent it identifies its changes in the environment and modifies itself as per the contingencies.
Institutional theory: continuity, homogeneity and consents are important requirement of organizations which assists in creating a set of formal and informal relationships within the organization. One of the organizational theory that explains that institutional environment can strongly be the reason of influence on the development of formal structure in an organization even more than what the market pressures can do (Greenwood, Oliver, Lawrence & Meyer, 2017). In order to maintain the internal environment, organization require respond to the institutional environment. The institutional environment mainly comprises of rules, regulation, norms and values to which organization need to abide. In order to maintain the legitimacy and support the organization need to abide by the rules and regulations. According to resource dependency theory and population ecology organization can respond distinctively to environmental cues. According to the institutional theorists it is the survival is only explained by an organization’s legitimacy (Williams & Shahid, 2016). For example, a school will be able to be successful only when everybody agrees that it is a school. When no one agrees to consider it as school, the institute cannot be called school in spite of its success in instruction and socialization. Institutional theory helps in understanding the pressure imposed on the institutions to be similar for the understanding reason which decreases the diversity institution. Organizations try to act in same way to be recognized and acceptable with similar standards in the organizational field. The theory of institution explains the way deliberate as well as accidental choices are leading the intuitional to mirror the ideologies, norms and values in the organizational field. In the end the whole process results in producing the environment’s expected characteristics and therefore receives the approval and legitimacy by the broader society. When an institute successfully pass to meet the expectation, the environment begin to view the characteristics which would be less likely to receive the resources. The environment within an institutional helps in avoiding discretion of institution by engaging in strategic activities and pressures the institutions towards more conformity. The theory also, focuses on the normative impacts of the environment on the organizational activity. The theory also argues that it is the environment that determines the organization’s options and limits discretions in choices that are available for the leaders. For conformity external pressure decide the range of decisions available for institution.
Population Ecology: Similar to institutional theory, the theory of population ecology is an open system theory. The prime task of population theory is to understand the reason for some organization survive while few organization in the same market fail to sustain. According to population ecology, it is the external environment through which organizations are determined. The organizations that successfully become able to fit or adapted to the external environment survive while the organization who do not fit, fail. The population ecology is the study of the procedure that impacts the distribution of animals and plants. Ecology is the interaction between the environment and living organism. The discipline in ecology that works with the structure and dynamics that is the growth and decline of the biological population is called the population ecology (Bennett, 2017). Also known as organizational ecology, it is an empirical approach considered under the organizational studies. It is receives its insights from economic, sociology and biology (Gadgil & Guha, 2013). The process also includes statistical analysis that aids in understanding the conditions under which emergence of organization occurs, it grows and dissolve. The population ecology in mainly dived into three levels. The three levels are the community, population and the organizations. The first level that is the community level includes the functionally integrated system of interacting with populations. The next level is the set of organisation who are together in same form of activity. The third level is the organizational level that is focused on the individual member and sub-unit levels. Population ecology challenges the view that individual organization in an effective manner and adapt to the changes in the environment without consequences (Sallis, Owen, & Fisher, 2015). The theory focuses on the changes occurring at the population level which is a result of the process of selection and replacement in an organisation. There are theoretical stream of research involved in the population ecology. The components of the population ecology are organizational founding, organizational morality, and density dependence and population dynamics.
Critical analysis: According to Friend and Jessop (2013), the strategic choice theory describes the role of the leader or group of leaders in an organization play through making choices which is for the purpose of influencing the organization. For determinist theories, according to Tidball and Stedman (2013) organizations’ choices are modified as per the outer world of the external environment. Therefore, according to organization’s structure, the determinist theory is the one that is most suitable for organizations as it covers most of the areas of organization’s need than strategic theory.
Conclusion:
Organizational structure describes the proper approach of taking lead in the market. There are two general theories that are considered to find the right approach. The two approaches are deterministic approach and strategic approach. The deterministic theory of organizational structure mainly focuses that the market place is to be called responsible as it more or less control the business. The organizations are compelled to change as per the market’s demand and must continually watch for challenges that may arise unexpectedly. The company needs to respond to the market. The whole industry and, social environment and marketplace are the determinates of the organization. Therefore the company should decide its goal and the structure pattern of the organization. In the other hand the strategic structure is the more widely accepted theory in organizations. According to the strategic structure, organization can control the market through various ways such as advertising, pricing strategies, networking with other companies and many more. Therefore, in the end of the essay it can be easily concluded that the strategic choice theory is more compelling. Due to the fact that strategic theory allows the company to control the market instated of responding to the changes in the market, it is a better approach and response to market.
References:
Bennett, J. W. (2017). The ecological transition: cultural anthropology and human adaptation. Routledge.
Friend, J., & Jessop, N. (2013). Local Government and Strategic Choice (Routledge Revivals): An Operational Research Approach to the Processes of Public Planning. Routledge.
Gadgil, M., & Guha, R. (2013). Ecology and equity: The use and abuse of nature in contemporary India. Routledge.
George, V., & Wilding, P. (2013). Ideology and social welfare. Routledge.
Greenwood, R., Oliver, C., Lawrence, T. B., & Meyer, R. E. (Eds.). (2017). The Sage handbook of organizational institutionalism. Sage.
Jones, G. R., & Jones, G. R. (2013). Organizational theory, design, and change. Upper Saddle River, NJ: Pearson.
Kozlenkova, I. V., Samaha, S. A., & Palmatier, R. W. (2014). Resource-based theory in marketing. Journal of the Academy of Marketing Science, 42(1), 1-21.
Lyons, S., & Kuron, L. (2014). Generational differences in the workplace: A review of the evidence and directions for future research. Journal of Organizational Behavior, 35(S1), S139-S157.
Sallis, J. F., Owen, N., & Fisher, E. (2015). Ecological models of health behavior. Health behavior: Theory, research, and practice, 5, 43-64.
Tidball, K., & Stedman, R. (2013). Positive dependency and virtuous cycles: from resource dependence to resilience in urban social-ecological systems. Ecological Economics, 86, 292-299.
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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