Organizational Ecosystems,

Resource Dependence
and
Population Ecology

Agenda
Organizational ecosystems
Changing role of management
Inter organizational framework
Resource dependence
Collaborative networks
Population ecology
Institutionalism

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Interorganizational Relationship
Relatively enduring resources transactions
flows,
and linkages
among two or more organizations
T

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Organizational Ecosystem
System formed by the interactions of a community of
organizations and their environment.
The analogy of an "ecosystem" is used to describe the
increasingly dense web of relationships among
organizations.
Relationships among large firms in the information
industry illustrate the notion of organizational ecosystem.

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An Organizational Ecosystem

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Is Competition Dead
James Moore has noted a trend of decreasing competition in the
traditional sense and increasing cooperation across
organizational and industry lines
How change in environment has affected role of management

Source:

Chrysler (Daft 6the p. 523). Chrysler transformed supplier relationships from

adversarial to cooperative by eliminating supplier bidding and emphasizing long-term
contracts

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Changing Role of Management

Evolution from top down management (concerned with the
vertical hierarchy) toward horizontal management
(concerned with relations across organizational boundaries,
including customers and suppliers)

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Resource Dependence Approach

Organizations try to minimize their dependence on other
organizations for the supply of important resources and try
to influence the environment to make resources available.
Dependence on a resource is based on:
importance of the resource to the organization
how much discretion or monopoly power suppliers of
resource have over its allocation and use
Resource Strategies: Strategies available to organizations
to minimize resource dependence

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Collaborative Networks
Tendency of companies to join together to share scarce resources
and be more competitive. Alternative to resource dependency

1. International Origins of Collaborative Networks

Mitsubishi (Daft 6the p. 530). Prime example of a keiretsu
involving hundreds of companies connected through
ownership, long term contracts, interlocking directorates, etc.
Toyota (Daft p. 174) Relates how production in Toyota
factories had to be shut down after a fire destroyed the only
supplier of a critical brake valve. In a short time 50
companies part of Toyota's keiretsu were able to retool to
restore production of the valves.
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Collaborative Networks
2. From Adversaries to Partners
Collaboration trend in U.S. began in non-profit sector (social
service and mental health organizations) and later spread to
profit sector; Empire Equipment; Volkswagen
Empire Equipment Co. (Daft p. 176). By using close technical
collaboration with a supplier of filters and long term contracts
Empire succeeded in reducing the cost of that component.
Volkswagen (see Daft p. 177). Plans for a VW assembly plant
in Brazil illustrate an advanced partnership leading to "coproduction" or a "modular consortium" involving 12 final
assemblers of components; the ultimate collaborative network!
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Interorganizational Relationships

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Population Ecology
Also known as organizational ecology,
Organizations are subject to a lot of inertia that prevent
them from adapting quickly to environmental fluctuations,
and they often do not have enough information to adapt
optimally (because of bounded rationality).
The process of change in a population of organizations is
based on mechanisms of competition among organizational
forms that can be described by a model of variationselection-retention analogous to the theory of evolution by
natural selection in biology

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Bounded Rationality
Bounded rationality is the idea that in decision-making,
rationality of individuals is limited by the information they
have, the cognitive limitations of their minds, and the finite
amount of time they have to make a decision.
It was proposed by Herbert A. Simon as an alternative basis
for the mathematical modeling of decision making, as used
in economics, political science and related disciplines

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Process of Ecological Change

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Variations, Selection, Retention

Variations means the appearance of new, diverse forms in
a population of organizations. These new organizational
forms are initiated by entrepreneurs, established with
venture capital by large corporation
Selection refers to whether a new organization form such
as Axiom is suited to the environment and can survive
Retention is the preservation and institutionalization of
selected organizational forms. Certain technologies,
products and services are highly valued by the
environment

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Institutionalism
Institutional Perspective
How organizations survive and succeed through
congruence between an organization and the expectations
from its environment
Legitimacy - appropriateness of an organization's actions
within system of norms, values, and beliefs
Institutional environment - norms, values, and beliefs of
stakeholders (including government)

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Institutionalism
Institutional Isomorphism
(= emergence of a common structure and behaviors
among organizations in the same field)
Mechanisms of institutional isomorphism:
mimetic isomorphism; EX: fads and fashions,
"benchmarking"
coercive isomorphism; EX: government regulation
normative isomorphism; EX: "smoke free events",
accounting standards
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Institutionalism

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Keiretsu
A keiretsu ( ?, lit. system, series, grouping of
enterprises, order of succession) is a set of companies with
interlocking business relationships and shareholdings. It is
a type of informal business group. The keiretsu maintained
dominance over the Japanese economy for the last half of
the 20th century

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Thank you!
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