Multinational Corporations And Organization Theory: Resource Dependence And Institutional Perspectives

Resource Dependence Theory and Multinational Corporations

Discuss about the Multinational Corporations and Organization Theory.

Organizational theory is mainly based on the approaches and methods to do the analysis of the organization there are certain theories of organizations which have a rational perspective and division of labor theory of bureaucracy and contingent theories. In any system of organization where a rational approach is followed it has two parts one of which is specification of the goals and another one is the formalization.Since the field of organizational theory is considered to be a fragmented body of knowledge there are many competing theories which assist in the explanation of organizational action. In the following essay critical analysis of some strategic choice making and determinist theories will be discussed. The main emphasis will be given to resource dependency theory, institutional theory and population ecology. The following is a will analyze that which perspective of organizational action is more compelling whether it is the strategic choice or the determinism.All these theories cumulatively or taken individually determine the type of organizational action needed in specific scenarios and which one is more relevant according to the situation. The following essay will give a Holistic idea about the relevance and importance of the respective theories which are discussed in details.

Since the publication of articles on the resource dependence perspective the respective theory has come out as the most influential theories in context with the organizational theory and Management based on the strategy. RDT considers the organization to be an open system which is based on the contingencies of the environment which is externally affected (Biermann & Harsch, 2017). It has been written that to understand the organizational behavior one must know the approach and concept of that behavior which is directly related to the ecology of the organization.RDT illustrates that the influence of the factors which are externally motivated have impact on the behavior of the organization. Although these actions can be termed as constrained and managers of the organization can take the initiative to minimize environmental uncertainties and dependence on these factors (Burke, 2017).In the light of these actions there is a concept of power in the organization which is related to the control over organizational resources. Any organization tries to reduce the power of those resources over them and relatively endeavors to enhance the organizational power over the resources.

Some literary sources create an argument over the resource dependence perspective with relation to the interorganizational relations and define their characteristics.They state that there should be a fundamental understanding of the intercorporate relations to be an organization in the society (Cicmil et al., 2017). They support that these organizations or not autonomous and are restricted buy a web of interdependencies incontext with other similar organizations.The notion of interdependence when taken together with the sentiment of uncertainty of what the consequences will be for the organizations which are interdependent creates a scenario for survival of both organizations leaving their cumulative success uncertain.To mitigate the situation of external interdependencies organizations tend to take actions which never prove to be fruitful for them in the Quest of success and they create new patterns of interdependence between the organizations and the external factors (Dell, 2017). The new patterns of interdependence have an effect of power who are the organization which directly affects behavior in the organization. With the development of resource dependence theory it has become the most relevant theoretical rationale which explains why the organizations tend to merge and acquire different organizations.The reason for mergers and acquisitions done by the organizations a justified as they become successful in decreasing the competition by merging with the top competitor organization (Desai, 2017). An added advantage to this method is that an organization reduces interdependence with the source and the market purchasers by absorbing them. Another reason is that an organization provides diversity to its operations therefore they decrease the dependency on the current organization with which it is in business.Resource dependence theory also advocates the reasons of why the organizations come into joint ventures with other companies.The main reasons can be illustrated as joint ventures facilitate strategic alliances, buyer-supplier associations, combined marketing agreements, research and development agreements and a consortium for high research (Fuenfschilling et al., 2017).Joint ventures also help the organizations to reduce complexities which are advent in the international environment and they also help in gaining diverse resources. The main theme for RDT is to reduce the interdependencies within an organization.

Interorganizational Relations and Resource Dependence

Institutional theory is a framework for the analysis of organizational systems which believes that the social world is comprehensively made of Institutions. It also illustrates that there are certain in during rules structures frameworks and practices which set the conditions for any action. With the help of institutional theory explanation of the fundamental concepts of social world can be done as they are believed that Institutions create social order and pave the way for smooth flow of social life (Gabriel et al., 2017). The variables of Institution theory are believed to set the rules of variations in the institutions. In the modern era it is believed that organizations have been extremely institutionalized because of the development of many professions, programs and policies which serve the powerful and the rich. A trend has been developed in which many organizations happily incorporate the programs services products policies and techniques because they strive to understand the concept of rationality (Gould & Taylor, 2017). Even if the organizations follow institutional theory they do not tend to make their framework more effective when it comes to functions of task performance. Rather it has been seen that the organizationswhich have institutional approach they do so to achieve legitimacy stability better chances of survival and to gain resources. The institutional theory have a symbolic aspect related with the functional aspect as they both have great influence on the decision making structure of an organization to serve their ulterior motives of gaining legitimacy and to survive in the market (Lowrey, 2017).

When the analysis of institutional process was done it was found that the institutional forces within the organization are isomorphic which means that they are similar in practice and inform. In the context of institutional theory many researchers contradicted the Classic theme of study and have introduced new analytical concepts. They established the concept of a field in which all the organizations of a certain domain have created a framework of institutional life (Manning,  2017). This institution is made up of key suppliers, regulatory agencies and consumer of the products. Just tired has been observed in the organizations who have similar kind of services and products. In the light of neo- institutional theory, certain concepts to be kept in mind hour institutional logics, institutional entrepreneurship and institutional change (Pinho, 2017).

There has been much fuss about the new concept of institutional entrepreneurship which has attracted huge amount of attention in past few years. Researchers of the organizational behavior have laid Emphasis to this concept as they have keen interest empower within an organization. If any organization has the ability to strategically change the entire context of an institution then they automatically gain the power and the Supremacy in relation to the organizations (Pullman & Baotung, 2017). The respective concept has been developed as more generalized concept which is related to the institutional work. The following concept is comprised of the methods of maintaining creating and destroying institutions.The institutional concept has been modified to benefit the researchers and the institutional believers as it has been related to the communication process within an organization (Vargas-Hernández et al. 2017). Therefore it can be stated that the importance of communication in an organization has been recognized in an institutional context.

Institutional Theory and Multinational Corporations

The population Ecology theory has given literature researchers a very important method to understand the phenomena of an organization on a macro level. In any organization if things are observed from a practical view there is a problem of sustainability in an organization which has crept up in recent years. It is believed that population ecology theory has the key for sustainability provision in organizations and it has the potential to realize the advantages of sustainability research (Walgenbach et al., 2017). There rise as a question that why there are so many types of organizations in the world. If an individual organization is taken into consideration, population ecology theory challenges the concept that they have better chances of adapting to the changing nature of business within the organization. The population ecology theory establishes that the changes which take place at the level of the population is an after effect of the process of selection and replacement in an organization (White & Ivanov, 2017). The theory states that the chances of an organization’s survival and existence is solely based on the selection of their environment which is local to their establishment. Although the changes for adaptation cannot be said to be impossible but have been really seen and have many restrictions. This is due to the fact that an individual organization have minimum external and internal forces of change.

When the population of the organizations are examined the issue of creating boundaries of population needs to be emphasized. One way to resolve this issue is to believe that every organization have a distinct character and the members of the organization must have common belief in context of the process of transformation dissolution and creation(Pinho, 2017). It has been observed that this concept has been criticized by many researchers. These critics have a point that the ecology of an organization needs a more rigid method based on scientific means in which the classifications should be done for each and every organization and the learning outcomes which are in the manner of the population should not vary.The theory of population ecology have certain assumptions which need to be taken into account(Gabriel et al., 2017). Firstly, the change in organizational behavior at the level of the population happen due to the creation and destruction of the organizations. Certainly this does not indicate that individual organizations do not change. It can be assumed that organizations can and to change radically but this change completely depends on the survival of the organization. It can be said that organizations tend to adapt to the changes in the environment and become institutionalized by keeping and expanding their form.With adoption of these methods an organization can grow and survive as long as there is no change in their?environment(Lowrey, 2017). However institutionalization develops and inertial force against the changes of an organization which does not allows it to adapt to a modified environment which in turn makes the routine and reliability ineffective.To reach the high levels of organizational inertia they must have great capacity of Reliability and accountability which further makes the organization create capacity of reproduction and expansion.Thus it can be stated that population Ecology theory provides means and ways for the organizations to develop and expand in an institutional manner(Biermann & Harsch, 2017).

Isomorphism and Field of Institutional Life

Conclusion

It can be concluded from the above essay discussion that organizational behavior are determined through various organizational theories. The above discussion contains most important organizational theories which are resource dependency theory, institutional theory and population ecology theory. These theories have different concepts and impact on the organizational behavior taken collectively.The resource dependency theory mainly revolves around the dependencies and interdependencies among different organizations and how an organization should manage its policies so that it can retain its position of power by minimizing the dependencies on other such organizations.The institutional theory is concerned about the social logical perspective of an organization and how the process of institutionalization has helped organization to establish themselves in the market with the presence of their competitors. It also concludes the reasons as to why the organizations have an institutional framework.The population Ecology theory determines the level of population of organizations in a particular market domain and the changes which has occurred in the population trend in recent years. It illustrates the reasons of change in population within an organization in different circumstances. Thus it can be concluded that, theories of organizational behavior play vital role in determination of the rules and regulations of the organizational change and how it should be according to the convention and by the newly researched methods.

References

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