Fundamentals of Organizational Structure PDF

CHAPTER 4 FUNDAMENTALS OF ORGANIZATION STRUCTURE Prof. Grazia Garlatti Costa [email protected] ©2024 Grazia Garlatti Costa  Organization Structure Three key components: §Vertical aspect of organizing 1. Formal reporting relationships includ...

CHAPTER 4 FUNDAMENTALS OF ORGANIZATION STRUCTURE Prof. Grazia Garlatti Costa [email protected] ©2024 Grazia Garlatti Costa  Organization Structure Three key components: §Vertical aspect of organizing 1. Formal reporting relationships including the number of levels and the span of control. 2. Grouping of individuals into departments and of departments into the total organization. §Horizontal aspect of organizing 3. Design of systems to ensure effective communication, coordination and integration of efforts. ©2024 Grazia Garlatti Costa  aganisation structure X A Sample Organization Chart vertical line Obee level hierarchy department many and how are they andhow are prevent related ©2024 Grazia Garlatti Costa  Information-Sharing Perspective on Structure At which level are decisions made in the organization? Centralization: decision authority is located near the top of the organization. Decentralization: decision authority is pushed downward to lower organization levels § Centralized versus decentralized decision making - Centralized authority focused on top level decision making. - Decentralized authority focused on shared tasks and decisions. § Traditional organization versus learning organization - Traditional organization design emphasizes vertical communication and control. - Learning organization which emphasizes communication and collaboration. ©2024 Grazia Garlatti Costa Efficiency versus Learning Outcomes ©2024 Grazia Garlatti Costa  Vertical Information Linkages Vertical linkages coordinate activities between the top and the bottom of the organization and are designed primarily for control of the organization. Three vertical devices to achieve vertical linkage: 1. Hierarchical referral are the vertical lines of the organization chart which identify the chain of command (hierarchy or chain of command). 2. Rules and plans - Rules enabling employees to be coordinated without actually communicating about every task. - Plans provide standing information for employees. 3. Vertical information systems is a strategy for increasing vertical information capacity. It includes reports, computer-based communication and written information. ©2024 Grazia Garlatti Costa  Horizontal Information Linkages Horizontal linkage refers to the amount of communication and coordinates activities across organizational departments. 1. Information systems enable information exchange throughout the organization. 2. Direct contact: e.g., Liaison role is a person located in one department but has the responsibility for communicating and achieving coordination and collaboration with another department 3. Task force is a temporary committee composed of representatives from each department involved. 4. Full-time integrator is a full-time position or department solely for the purpose of coordination (e.g., product manager, project manager, program manager, or brand manager). 5. Teams are the strongest horizontal linkage. Permanent task forces made up of managers from different functional areas (Special project teams, Virtual teams). ©2024 Grazia Garlatti Costa Project Manager Location in the Structure head of Pete has not authority X- get in all the touch with department 5 Toactive ea ©2024 Grazia Garlatti Costa  balance between this two basedan different needs ~ conf Ladder of Mechanisms for Horizontal Linkages ©2024 Grazia Garlatti Costa  The design of organization structure Three key indicators of organization design: 1. Required work activities: Departments are created to perform tasks considered strategically important to the company. As organizations grow larger and more complex: new positions, departments, or divisions as a way to accomplish new tasks. 2. Reporting relationships (Chain of command): The chain of command: the vertical lines on an organization chart. An unbroken line of authority that links all persons in an organization and shows who reports to whom. 3. Departmental grouping options: Departmental grouping affects employees because they share a common supervisor and common resources, are jointly responsible for performance, and tend to identify and collaborate with one another. There are several options or grouping. ©2024 Grazia Garlatti Costa  Departmental grouping options Ø Functional grouping Ø Divisional grouping Ø Multifocused (Matrix) grouping Ø Virtual network grouping Ø Holacracy team grouping ©2024 Grazia Garlatti Costa  Main developed department For the company we have to select which is the structure to adopt, why they decide too adopte this, which are the pros and cons of these 0 Departmental Grouping Options These grouping option affect employees since they share the same supervisor ©2024 Grazia Garlatti Costa  Functional and divisional Functional Structure grouping are the more common ◦ In a functional structure, also called a U-form (unitary), activities are grouped by common function from the bottom to the top of the organization. ◦ All specific skills and knowledge are consolidated, providing a valuable depth of knowledge for the organization. ◦ The functional structure is a prevalent approach, but few companies can respond in today’s environment without horizontal linkages ◦ Functional structure with Horizontal Linkages to improve horizontal coordination. ©2024 Grazia Garlatti Costa  Functional Structure: Strengths & Weaknesses Strengths Weaknesses 1. Allows economies of scale within 1. Slow response time to functional departments environmental changes 2. Enables in-depth knowledge and 2. May cause decisions to pile on skill development top; hierarchy overload 3. Enables organization to 3. Leads to poor horizontal accomplish functional goals coordination among departments 4. Is best with only one or a few 4. Results in less innovation products 5. Involves restricted view of organizational goals ©2024 Grazia Garlatti Costa  Divisional Structure ◦ With a divisional structure, also called an M-form (multidivisional) or a decentralized form, separate divisions are responsible for individual products, services, product groups, major projects or programs, divisions, businesses, or profit centers. ◦ Grouping is based on organizational outputs. ◦ Organizations tend to shift from functional to divisional structures as they become more complex. ©2024 Grazia Garlatti Costa  funcional structure can rorganized be X Functional vs Divisional Structure: an Example 7 lime each has differe functions ©2024 Grazia Garlatti Costa  Divisional Structure: Strengths & Weaknesses Strengths Weaknesses 1. Suited to fast change in unstable 1. Eliminates economies of scale in environment functional departments 2. Leads to customer satisfaction 2. Leads to poor coordination across because product responsibility and product lines contact points are clear 3. Eliminates in-depth competence and 3. Involves high coordination across technical specialization functions 4. Makes integration and 4. Allows units to adapt to differences in standardization across product lines products, regions, customers difficult 5. Best in large organizations with several products 6. Decentralizes decision making ©2024 Grazia Garlatti Costa  Geographic Structure ◦ Groupings are based on the geographical locations of the organization’s users or customers to meet needs of users/customers by geography. ◦ Many multinational corporations are organized by country. ◦ Managers and employees focus on specific geographic regions. ◦ Strengths and weaknesses are like those of a divisional structure. ◦ Horizontal coordination within a region is emphasized rather than linkages across regions or to a national office. ©2024 Grazia Garlatti Costa  Matrix Structure ◦ A matrix structure is a solution when an organization’s structure needs to be multifocused in that both product and function or product and geography are emphasized at the same time. ◦ The matrix can be used when both technical expertise and product innovation and change are important for meeting organizational goals. ◦ The unique characteristic: both product divisions and functional structures (horizontal and vertical) are implemented simultaneously. ◦ The product managers and functional managers have equal authority within the organization, and employees report to both of them. ©2024 Grazia Garlatti Costa  Matrix Structure: Conditions and Variants § Three conditions for matrix structure 1. Condition 1: Pressure exists to share scarce resources across product lines 2. Condition 2: Environmental pressure exists for two or more critical outputs 3. Condition 3: The environmental domain of the organization is both complex and uncertain. § Under these three conditions, the vertical and horizontal lines of authority must be given equal recognition. § A dual-authority structure can help to ensure a balance between vertical and horizontal aspects of organizations. § Two variations of matrix structure - Functional matrix - Product matrix ©2024 Grazia Garlatti Costa  Dual-Authority Structure in a Matrix Organization companyneed 3 level of In high and nowledge expective at the same [ time they want to n specialize difflent product ©2024 Grazia Garlatti Costa  Matrix Structure: Strengths & Weaknesses Strengths Weaknesses 1. Achieves coordination necessary to 1. Causes participants to experience dual meet dual demands from customers authority, which can be frustrating and 2. Flexible sharing of human resources confusing across products 2. Means participants need good 3. Suited to complex decisions and interpersonal skills and extensive training frequent changes in unstable 3. Is time consuming; involves frequent environment meetings and conflict-resolution sessions 4. Provides opportunity for both 4. Will not work unless participants functional and product skill understand it and adopt collegial rather development than vertical-type relationships 5. Best in medium-sized organizations 5. Requires great effort to maintain power with multiple products balance ©2024 Grazia Garlatti Costa  Virtual Networks and Outsourcing § It extends the concept of horizontal coordination and collaboration beyond the boundaries of the organization. § A most common strategy is outsourcing: contracting out certain tasks/functions. § A few organizations carry outsourcing to the extreme to create a virtual network structure. § A Virtual Network (or Modular) structure subcontract most of their major functions to separate companies. § The virtual network organization serves as a central hub surrounded by a network of outside specialists. ©2024 Grazia Garlatti Costa ex minefication Virtual Network Structure: an example ©2024 Grazia Garlatti Costa  Virtual Network Structure: Strengths & Weaknesses Strengths Weaknesses 1. Enables even small organizations to 1. Managers do not have hands-on obtain talent and resources control over many activities and worldwide employees 2. Gives a company immediate scale 2. Requires a great deal of time to and reach without huge manage relationships and potential investments in factories, equipment, conflicts with contract partners or distribution facilities 3. There is a risk of organizational failure if 3. Enables the organization to be a partner fails to deliver or goes out of highly flexible and responsive to business changing needs 4. Employee loyalty and corporate 4. Reduces administrative overhead culture might be weak because costs employees feel they can be replaced by contract services ©2024 Grazia Garlatti Costa  Represent a shift to self management Holacracy Team Structure ◦ The holacracy approach reflects an organizational design shift toward self- management à Horizontal Structure. ◦ A form of “Circles” (the holacracy term for teams) are the basic unit and building block of structure ◦ Each circle shares a common purpose and has decision-making authority over its work. ◦ The holacracy team structure is an extreme organic design composed of fluid teams and no managers. ◦ A few informal leaders may emerge within the circles based on who has expertise in the matter at hand. ◦ Employees decide when a new circle is needed or when a circle should be abandoned. ◦ Each employee performs a variety of roles, generally on 3–4 teams at the same time ◦ This structure is used primarily in small to medium size organizations that face a need for continuous learning and innovation to meet rapidly changing customer needs. ©2024 Grazia Garlatti Costa  Holacracy Team Structure: Strengths & Weaknesses Strengths Weaknesses 1. Promotes a focus on teamwork and 1. Determining individual and team collaboration responsibilities is time consuming 2. Promotes rapid, innovative 2. Requires changes in management responses to customer needs philosophy and culture 3. Each employee has a broader view 3. Traditional managers may baulk when of the organization’s purpose they have to give up power and authority 4. Decisions are made close to the work 4. Requires significant training of employees in social skills 5. Improves employee growth via sharing responsibility, making 5. Can limit in-depth skill development in decisions, and being accountable a specific function for outcomes ©2024 Grazia Garlatti Costa summar Application of Structural Design Organization’s Need for Efficiency vs. Learning ©2024 Grazia Garlatti Costa  Application of Structural Design § Each type of structure is applied in different situations and is intended to meet different needs. § Structural alignment aligns structure with organizational goals. § Symptoms of structural deficiency: ◦ Absence of collaboration among units. ◦ Decision making is delayed or lacking quality. ◦ Organization does not respond innovatively to a changing environment. ◦ Employee performance declines. ◦ Goals are not being met. ◦ Too much conflict. ©2024 Grazia Garlatti Costa  Summary ◦ Structure must provide a framework, linking the organization as a whole. ◦ Provide vertical and horizontal linkages. ◦ Variety of alternatives for grouping. ◦ Virtual network extends horizontal coordination. ◦ Matrix structure attempts to achieve balance between the vertical and horizontal dimensions of structure. ◦ Managers must find the right balance. ©2024 Grazia Garlatti Costa  CHAPTER 5 THE EXTERNAL ENVIRONMENT Prof. Grazia Garlatti Costa [email protected] ©2024 Grazia Garlatti Costa  The Environmental Domain § Organizational environment is defined as all elements that exist outside the boundary of the organization and have the potential to affect all or part of the organization. § It can be understood by analyzing its domain within the external sector. ◦ Domain is the chosen environmental field of action. ◦ The domain defines the organization’s niche and defines those external sectors with which the organization will interact to accomplish its goals. ◦ Sectors or subdivisions (of the environment) that contain similar elements. ©2024 Grazia Garlatti Costa An Organization’s Environment ©2024 Grazia Garlatti Costa An Organization’s Environment Domain and factor are different This element are related with sociocultural, economic or tecnological sector ©2024 Grazia Garlatti Costa  Task Environment § It includes sectors with which the organization interacts directly and that have a direct impact on the organization’s ability to achieve its goals. § It typically includes: ◦ The industry ◦ Raw materials sector ◦ Market sector ◦ Human resources sector ◦ International sector ©2024 Grazia Garlatti Costa  General Environment § It includes sectors that might not have a direct impact on the daily operations of a firm but will indirectly influence it. § It typically includes: ◦ Government sector ◦ Sociocultural sector ◦ Economic conditions ◦ Technology sector ◦ Financial resources sector Balsn't impact directly like tark environment ©2024 Grazia Garlatti Costa  International Context § The international sector can directly affect many organizations, and it has become extremely important in the last few years. § Distinctions between foreign and domestic operations have become increasingly irrelevant. § All organizations face domestic and global uncertainty. § The increasing interconnections represent both opportunities and threats for organizations. § Organizations are becoming extremely complex and competitive. ©2024 Grazia Garlatti Costa  PESTEL analysis usefl every 6 month ©2024 Grazia Garlatti Costa PESTEL analysis ©2024 Grazia Garlatti Costa  Dimensions of the Environment how enviromet relatedto event of impact organisation ? twinament 20 stable or untable envinement T en L simple complex ↓ ©2024 Grazia Garlatti Costa dant of financial available resances  The Changing Environment ◦ As the environment becomes more complex, events become less stable ◦ As financial resources become less available, the level of uncertainty increases Ø The environment influences organizations through: 1. The need for information about the environment. 2. The need for resources from the environment. If we have an increase in instability we have an increase in the research of information ©2024 Grazia Garlatti Costa  Elements of Uncertainty Uncertainty: Lack of sufficient information about environmental factors and difficulty predicting external changes. Environmental uncertainty pertains primarily to those sectors that an organization deals with on a regular, day-to-day basis (Task environment). To assess uncertainty, each sector of the organization’s task environment can be analyzed along dimensions such as stability or instability and degree of complexity. ØComplexity: Number and dissimilarity of external elements ØDynamism: Whether the organization operates in a stable or unstable environment ©2024 Grazia Garlatti Costa  Elements of Uncertainty: Complexity ØComplexity: Number and dissimilarity of external elements, such as suppliers, competitors, and government regulations. A complex environment is one in which the organization interacts with, and is influenced by, numerous diverse external elements. In a simple environment, the organization interacts with and is influenced by only a few similar external elements. ©2024 Grazia Garlatti Costa  Elements of Uncertainty: Dynamism ØDynamism: Whether the organization operates in a stable or unstable environment An environmental domain is stable if it remains essentially the same over a period of months or years. Under unstable conditions, environmental elements shift rapidly. Shifts in the environment (E.G., consumer tastes, new technologies, or competitor innovations) can cause a company to quickly fall behind. Specific, unpredictable events create unstable conditions for an organization. ©2024 Grazia Garlatti Costa Childe Framework jat Framework for assessing uncertainty Summarise uncertainty We have two elements complexity and dynamism We have two dimensions the environmental dynamism and environmental complexity > - We have 4 different scenarios manager need to adapt change to , characterised by different level e of uncertainty > - ↓ ©2024 Grazia Garlatti Costa ifcouple -  Adapting to Environmental Uncertainty Environmental uncertainty represents an important contingency for organization structure and internal behaviors. An organization in a certain environment will be managed and controlled differently from an organization in an uncertain environment with respect to: üpositions and departments, üorganizational differentiation and integration, ücontrol processes, and üfuture planning and forecasting. Organizations need the right fit between internal structure and the external environment. ©2024 Grazia Garlatti Costa  Adapting to Environmental Uncertainty - 1 1. Adding positions and departments üAs complexity and uncertainty in the external environment increase, so does the number of positions and departments within the organization, leading to increased internal complexity. üThe number of positions and departments tend to increase. 2. Building relationships üBuffering roles üBoundary-spanning roles link and coordinate an organization with key elements in the external environment. üBusiness intelligence is a new approach to boundary-spanning. üCompetitive intelligence is another important area of boundary-spanning. üIntelligence team direct relationship ofrad L and extende environment ©2024 Grazia Garlatti Costa depanent  Adapting to Environmental Uncertainty - 2 3. Differentiation and integration ü Differentiation is the differences in cognitive and emotional orientations among managers in different departments. ü Integration is the quality of collaboration among departments. 4. Organic versus mechanistic management processes ü Mechanistic system: Formalized and centralized. ü Organic system: Not formalized and decentralized. 5. Planning, forecasting and responsiveness ü With increasing environment uncertainty, these become more important, but also more difficult. ©2024 Grazia Garlatti Costa  Organizational Departments Differentiate to Meet Needs of Sub-environments Loven study Each department isinterrelated with specific external groups ©2024 Grazia Garlatti Costa High differentiation in sub departments create confusion important investment in innovation and coordination to reduce differentiation with integrators of horizontal linkage method  Mechanistic and Organic Forms Mechanistic Organic STABLE ENVIRONMENT UNSTABLE ENVIRONMENT LOW UNCERTAINTY HIGH UNCERTAINTY ØTasks are broken into ØTasks are adjusted and specialized, separate parts redefined through teamwork ØTasks are rigidly defined ØThere is less of a hierarchy of ØThere is a strict hierarchy of authority and control authority and control ØKnowledge and control of tasks ØKnowledge and control of tasks are decentralized are centralized ØCommunication is horizontal ØCommunication is vertical ©2024 Grazia Garlatti Costa Framework for Organizational Responses to Uncertainty ~ Un e ©2024 Grazia Garlatti Costa Dimensions of the Environment available to the support group ©2024 Grazia Garlatti Costa  Resources Dependence ◦ Companies strive to acquire control over financial resources to minimize their dependence on other organizations. ◦ Resource-dependence means organizations depend on the environment BUT strive to acquire control over resources to minimize their dependence. ◦ Minimize vulnerabilities. ◦ Dependence on shared resources give power to other organizations. ◦ Will team up with others when resources are scarce and be more competitive on a global bias. ◦ Formal relationships with other organizations present a dilemma to managers. ◦ Also need to maximize their own autonomy and independence. ©2024 Grazia Garlatti Costa  Controlling External Resources Two strategies can be adopted to manage resources in the external environment: 1) Establishing interorganizational linkages 2) Shape the environmental domain influencing key sectors ©2024 Grazia Garlatti Costa  Controlling External Resources Two strategies can be adopted to manage resources in the external environment: 1) Establishing interorganizational linkages 1. Ownership: A greater degree of ownership through acquisition or merger. 2. Formal strategic alliances are formed through contracts and joint ventures. 3. Cooptation, interlocking directorates 4. Executive recruitment 5. Advertising and public relations: It is important in highly competitive consumer industries and in ones that experience variable demand. ©2024 Grazia Garlatti Costa  Controlling External Resources 2) Shape the environmental domain influencing key sectors 1. Change of domain: Acquisition and divestment are two techniques for altering the domain. 2. Political activity, regulation: Political strategy can be used to erect regulatory barriers against new competitors or to squash unfavourable legislation. 3. Trade associations with other organizations that have similar interests. 4. Illegitimate activities: Companies in industries with low demand, shortages and strikes are more likely to be convicted for illegal activities. ©2024 Grazia Garlatti Costa Summary Organization-Environmental Integrative Framework ©2024 Grazia Garlatti Costa  CHAPTER 6 Interorganizational relationships Prof. Grazia Garlatti Costa [email protected] ©2024 Grazia Garlatti Costa  Organizational Ecosystems ØInterorganizational relationships are the relatively enduring resource transactions, flows, and linkages that occur among two or more organizations. Ø Organizational ecosystems are systems formed by the interaction of a community of organizations and their environment. - An ecosystem cuts across traditional industry lines. - In an ecosystem, conflict and cooperation frequently exist at the same time. - Megacommunity approach ©2024 Grazia Garlatti Costa  Is competition dead? ØTraditional competition, which assumes a distinct company competing for survival and supremacy with other stand-alone businesses, no longer exists. ØHowever, most managers recognize that the competitive stakes are higher than ever. ØIn today’s world, a new form of competition is intensifying. ØToday’s competition involves clusters of businesses competing with other clusters. ØSome companies believe cooperation is essential to success. ØIn general, cooperation has become the rule in many industries ØCompanies today may use their strength to achieve victory over competitors, but ultimately cooperation carries the day. üFrenemies üCoopetition ©2024 Grazia Garlatti Costa Organizational ecosystem: an example Alliance’s with different companies Is competition died? Collaboration is key to create new and useful products ©2024 Grazia Garlatti Costa If not died but changed Ex competition between is and android but then they collaborate the cloud system Another aspect is global complexity > collaborate and compete at the same time Managers have to consider also the collaborative responsibility of a company I  Interorganizational framework Two dimension: similar dissimilar ØInterorganizational framework: Competitive or comperative of üUseful for managers in changing their role from top-down management to horizontal coordination across organizations. üIt is a framework for analyzing the different views of interorganizational relationships. üRelationships among organizations can be characterized by whether the organizations are dissimilar or similar and whether relationships are competitive or cooperative. üBy understanding these perspectives, managers can assess their environment and adopt strategies to suit their needs. ©2024 Grazia Garlatti Costa  A Framework for Interorganizational Relationships ©2024 Grazia Garlatti Costa Can make bigger investments Collaborative Networks ØThe collaborative-network perspective is an emerging alternative to resource-dependence theory. ØCompanies join together to become more competitive and to share scarce resources Why collaboration? ◦ Collaboration allows risks to be shared. ◦ Cooperation is a prerequisite for greater innovation. ◦ Partnership is a major avenue for entering global markets. ◦ Interorganizational linkages provide a kind of safety net that encourages long-term investment and risk. From adversaries to partners ◦ Partnership is based on interdependence and trust. ◦ Dependence on another company is seen to reduce rather than increase risk. ©2024 Grazia Garlatti Costa What you have to pay attention if you crate collaborative network? Relationship can be dangerous when you can depend from the other Changing Characteristics of Interorganizational Relationships Traditional Orientation: Adversarial New Orientation: Partnership Low dependence High dependence ◦ Suspicion, competition, arm’s length ◦ Trust, addition of value to both sides, high commitment ◦ Detailed performance measures, closely ◦ Loose performance measures; problems discussed monitored ◦ Equity, fair dealing, both profit ◦ Price, efficacy, own profits ◦ Electronic linkages to share key information, problem ◦ Limited information and feedback feedback, and discussion ◦ Legal resolution of conflict ◦ Mechanisms for close coordination; people on site ◦ Minimal involvement and up-front investment, ◦ Involvement in partner’s product design and separate resources production, shared resources ◦ Short-term contracts ◦ Long-term contracts ◦ Contract limiting the relationship ◦ Business assistance beyond the contract ©2024 Grazia Garlatti Costa  Population Ecology ØA population is a set of organizations engaged in similar activities with similar patterns of resource utilization and outcomes. ØOrganizations within a population compete for similar resources or similar customers. ØThe population ecology perspective focuses on organizational diversity and adaptation within a population of organizations. ØThe population im population ecology model is developed from theories of natural selection in biology, and the terms evolution and selection are used to refer to the underlying behavioral processes. ©2024 Grazia Garlatti Costa  Population Ecology ØA new organizational forms that create diversity constantly appearing. ØInnovation and change in a population of organizations take place through the birth of new types of organizations ØIndeed, organizational forms are considered relatively stable, and the good of a whole society is served by the development of new forms of organization through entrepreneurial initiatives. ØNew organizational form meets the new needs of society more than established organizations that are slow to change. ØIn practical terms: large, established firms often have tremendous difficulty adapting to a rapidly changing environment. new organizational forms that fit the current environment emerge, fill a new niche. ©2024 Grazia Garlatti Costa  Population Ecology ØOrganization form and niche - Form is an organization’s specific technology, structure, products, goals and personnel. - Each organization attempts to find a niche. ØProcess of ecological change - New organizations are always appearing in the population. - Variation – selection – retention. ØStrategies for survival - Competitive struggle for resources – struggle for existence. - Generalist and specialist strategies distinguish organizational forms in the struggle for survival. ©2024 Grazia Garlatti Costa Elements in the Population-Ecology Model of Organizations 000 ©2024 Grazia Garlatti Costa  Institutionalism ØThe institutional perspective describes how organizations survive and succeed through congruence between an organization and the expectations of its environment. ØInstitutional environment Norms and values of stakeholders. Adopt structures and processes to please outsiders. ØLegitimacy – an organization’s actions are desirable, proper, and appropriate. ØInstitutional theory is concerned with the set of intangible norms and values that shape behaviour, as opposed to the tangible elements of technology and structure. ØIsomorphism: movement towards similarity. ©2024 Grazia Garlatti Costa  Institutional View and Organizational Design Technical Dimension Institutional Dimension ◦ Day-to-day work ◦ Parts of the organization ◦ Technology that are visible to the outside public ◦ Operating requirements Governed by the Governed by norms and expectations from the rationality of efficiency external environment ©2024 Grazia Garlatti Costa  Institutional similarity ◦ The institutional similarity is the emergence of a common structure and approach among organizations in the same field. ◦ The core mechanisms for adaptation are: mimetic forces, coercive forces, and normative forces Mimetic Coercive Normative Reason to become Uncertainty Dependence Duty, obligation similar: Professionalism— Innovation Political―laws, rules, Events: certification, visibility sanctions accreditation Culturally Social basis: Legal Moral supported Accounting Pollution controls, Reengineering, standards, Example: school benchmarking consultant regulations ©2024 Grazia Garlatti Costa training  Summary § There has been an evolution in interorganizational relationships. § Organizations operate within a ecosystem. § Four perspectives have been developed to explain relationships among organizations. 1. The resource-dependence view argues that organizations try to avoid excessive dependence on other firms. 2. The collaborative-network view suggests that collaboration is an emerging alternative to resource dependence. 3. The population-ecology view argues that new organizations fill niches left open by established companies. 4. The institutional perspective notes that interorganizational relationships are shaped by legitimacy as well as products/services. ©2024 Grazia Garlatti Costa