Chapter Five
Interorganizational Relationships
Thomson Learning
© 2004
5-1
A Framework of Interorganizational
Relationships*
Organization Type
Dissimilar
Similar
Competitive
Organization
Relationship
Resource
Dependence
Population
Ecology
Dissimilar
Cooperative
Collaborative
Network
Institutionalism
Similar
*Thanks to Anand Narasimhan for suggesting
this framework.
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© 2004
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Organization Strategies for
Controlling the External
Environment

Establishing
Interorganizational Linkages:
 Ownership
 Contracts, joint
ventures
 Cooptation, interlocking
directorates
 Executive recruitment
 Advertising, public relations
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© 2004
Controlling the
Environmental Domain:
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Change of domain
Political activity, regulation
Trade associations
Illegitimate activities
5-3
Changing Characteristics of
Interorganizational Relationships
Traditional Orientation:
Adversarial
New Orientation:
Partnership
Suspicion, competition, arm’s length
Trust, addition of value to both sides, high
commitment
Price, efficiency, own profits
Equity, fair dealing, both profit
Limited information and feedback
Electronic linkages to share key information,
problem feedback and discussion
Legal resolution of conflict
Mechanisms for close coordination, people on-site
Minimal involvement and up-front
investment, separate resources
Involvement in partner’s product design and
production, shared resources
Short-term contracts
Long-term contracts
Contract limiting the relationship
Business assistance beyond the contract
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Collaborative Network:
Dissimilar Organizations
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Value Chain
Networks
Organizations +
Suppliers +
Distributors
Trust = Social
Capital
Embeddedness
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5-5
Collaborative Networks:
Similar Organizations
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Industry clusters
Leather/Shoes-Italy
Silicon Valley
Factor networks:
consolidate inputs
Producer networks:
consolidate &
allocate capacity
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5-6
Elements in the Population Ecology
Model of Organizations
Variation
Large number
of variations
appear in the
population of
organizations
Selection
Retention
Some
organizations
find a niche
and survive
A few
organizations
grow large and
become
institutionalized
in the
environment
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Niche Width Theory
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Hannan & Freeman
(1977, 1989)
Specialist/Generalist
Narrow, deep resource
exploitation vs. broad
exploitation with some
contingent capability
Do-nut shop or steak
house vs. full menu
restaurant
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Niche Width Strategies

Specialist
- single-unit
- multiunit

Generalist
- single-unit
- multiunit

Polymorph
- multiunit
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Specialist Strategies
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Single-unit
Seeks exact fit with
customer
Deep exploitation of market
Examples: Ferrari, Sam’s
Sushi
Multiunit
Honed efficiency of routines
Scale economies
Identical subunits
Examples: AAMCO, Benihana
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Generalist Strategies
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Single-unit
Single approach to average
customer at center of market
Broad exploitation with some
embedded contingent slack
Examples: L.L.Bean, Joe’s
Eats
Multiunit
Center of market but
efficient delivery emphasized
Scale economies
Identical subunits
Examples: Wal-Mart, Denny’s
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What’s a Polymorph?
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Biological term:
single species with
locally adapted subspecies
Example: birds of
same species
specialized to
variations in
available food along
vertical gradients in
habitat
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© 2004
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What’s a Polymorph?
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Organizational term:
multiunit structure
(chains, franchises)
with locally adapted
outlets or units
Example: Best
Western hotel chain
- smaller units stress
local character
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5-14
Three Mechanisms for Institutional
Adaptation
Mimetic
Coercive
Normative
Uncertainty
Dependence
Duty,
obligation
Events:
Innovation
visibility
Political law,
rules, sanctions
Professionalism—
certification,
accreditation
Social
basis:
Culturally
support
Legal
Moral
Reasons to
become
similar:
Example:
Reengineering, Pollution controls,
benchmarking school regulations
Source: Adapted from W. Richard Scott,
Institutions and Organizations (Thousand Oaks,
Calif.: Sage, 1995).
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© 2004
Accounting
standards,
consultant
training
5-15
Institutionalization:
Mimetic Forces
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The imitation of
organizational
structures, techniques
or behaviors from
other organizations
This modeling is done
without any clear
proof that
performance will be
improved
Generally takes place
under conditions of
high uncertainty
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© 2004
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Institutionalization:
Coercive Forces
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External pressures
exerted upon
organizations to adopt
structures,
techniques, or
behaviors similar to
other organizations
Government,
regulatory agencies
and/or powerful firms
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© 2004
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Institutionalization:
Normative Forces
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Pressures to achieve
professional
standards
Preferred techniques
versus required
regulations
(coercive)
Legitimacy seeking
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© 2004
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