ORGANIZATIONAL ENVIRONMENT ORGANIZATION THEORY AND DESIGN MAY 2010 30/04/2023 Tilahun Teklu 1 Basic Model Environment Organizational Effectiveness Organizational characteristics 30/04/2023 Tilahun Teklu 2 Nature of Environment 30/04/2023 Uncertainty Firm’s direction of resource allocation -Primary transformation process -Boundary spanning units -Information – processing units -Decision-making units Tilahun Teklu 3 SUBJECTS 1. 2. 3. 4. 5. THE ENVIRONMENT CONCEPT ENVIRONMENT CHANGE PICTURING THE ENVIRONMENT & METHODS ENVIRONMENTAL CHANRACTERISTICS ENVIRNOMENT-STRUCTURE-EFFECTIVENESS 30/04/2023 Tilahun Teklu 4 ENVIRONMENTAL CHANGE Organizational environments are changing more rapidly than before This idea gives rise to change in emphasis in managerial thinking and training Traditional thinking :stability (internal orientation) Modern thinking :change (external orientation) 30/04/2023 Tilahun Teklu 5 Picturing the environment 1st method: the aspect method –List aspects that are potentially influential –Determine those that influence a given organization most 2nd method: the contact method –List major contacts of organizations –Determine most important influencers –Determine influence networks 3rd method: the systems method –List input relationships –List output relationships –Investigate causal texture 30/04/2023 Tilahun Teklu 6 Environmental Dimensions Uncertainty Complexity Interconnectedness Movement/change 30/04/2023 Tilahun Teklu 7 Environmental Characteristics Uncertainty Causes Information Cause-effect Outcome performances Time-span Assigning probabilities Reactions: Ostrich reaction Inability to act Trying to play a part in the game Changing internal structure 30/04/2023 Tilahun Teklu 8 Environmental Dimensions simple – complex dimensions Number of elements – Differences between elements Simple referring to ‘the degree to which the factors in the decision unit’s environment are few in number and are similar to one another in that they are located in a few components (Duncan, 1972, p. 315)’. Complex phase indicates that ‘the factors in the decision unit’s environment are large in number (Duncan, 1972, p.315)’. 30/04/2023 Tilahun Teklu 9 Environmental Dimension Interconnectedness By flow of information (formal/informal) By power coalitions (actual/potential) Interconnectedness: elements in the external environment are linked in such a manner that a change induced or emitted in one affects the others. 30/04/2023 Tilahun Teklu 10 E Environmental Dimension L22 L22 Interconnectedness (Emery and Trist, 1965) B D L22 L22 explains the interdependence. L22 are: •Indirect •The causal texture of the organization •Contributing to a the uncertainties facing the organization. L22 L22 A C L21 F L12 Emery and Trist developed a typology of causal texture based on two dimensions: 1. Strength of interconnectedness 2. Rate of movement Interconnectedness: elements in the external environment are linked in such a manner that a change induced or emitted in one affects the others. Movement: movement refers to the change rate in environmental elements. 30/04/2023 Tilahun Teklu 11 Environmental Dimension Interconnectedness (Emery and Trist, 1965) Internal interdependencies (L11) Transactional interdependencies Linkages between components within the focal organization Input transactional Direct linkages between components interdependencies (L21) of the input environment and the focal organization Output transactional Direct linkages between the focal interdependencies (L12) organization and components of the output organization Environmental interdependencies (L22) 30/04/2023 Linkages through which components or the external environment of the focal organization become related to one another Tilahun Teklu 12 Environmental Dimension Movement/change (Static – dynamic dimensions) This dimension indicates ‘the degree to which the factors of the decision unit’s internal and external environment remain basically the same over time or are in a continual process of change Measured by any of or all of the following: Change in elements Change in importance of elements New elements 30/04/2023 Tilahun Teklu 13 Concept of uncertainty complexity Uncertainty interconnectedness movement 30/04/2023 Tilahun Teklu 14 Concept of uncertainty Instability (rate of change) unpredictability Ignorance of data And cause and effect uncertainty Number of variables (homogenous – heterogeneous) Complexity Interdependence of Variables (interconnectedness) 30/04/2023 Tilahun Teklu 15 Concept of uncertainty Static Complexity Interconnectedness Routineness remoteness Dynamic Rate of change unpredictability uncertainty Receptivity Resource scarcity Output receptivity Domain choice flexibility 30/04/2023 Tilahun Teklu 16 Typology of environment based on Emery and Trist (1965) High interconnectedness Placid Clustered Turbulent field Distributed Reactive Low movement High movement Placid Randomized Low interconnectedness 30/04/2023 Tilahun Teklu 17 Typology of environment based on Emery and Trist (1965) Placid (quit) clustered Pattern of resources was sequentially predictable. Interdependence with such environments involves the sequential probabilities of the shifts in resources availability and the relationship to the organization’s requirements. Strategy: accumulate enough resources to survive the period of scarcity Interconnectedness : Movement: high low (moderate certainty, strategies, negotiations with groups) 30/04/2023 Tilahun Teklu 18 Typology of environment based on Emery and Trist (1965) Placid Randomized Resources desired by the organization were randomly distributed throughout the environment, with a constant probability of uncovering necessary resources as the organization searched the environment. Strategy: use different kinds of resources; store a single resource; use abundant resources Interconnectedness : Movement: low low (certainty, simple problem solving, short run, dealing with separate elements) 30/04/2023 Tilahun Teklu 19 Typology of environment based on Emery and Trist (1965) Distributed - Reactive The distributions and probabilities of resources are created by the action of the organizations themselves. Competitive interdependence characterizes such environment. Strategy: identify interdependence, anticipate the sequence of actions and reactions of competitors Interconnectedness : Movement: high high (uncertainty, long term, strategies, anticipation of reactions (game theory)) 30/04/2023 Tilahun Teklu 20 Typology of environment based on Emery and Trist (1965) Turbulent Field Involves the connection of sets of actors to other sets of actors, such that any one actor is connected to the set of actors with which he is immediately interdependent, and the environment itself is interconnected with other sets of interdependent actors. Actions in other parts of the interconnected system, …, can have impact on the organization’s immediate exchange Strategy: diversify, strategy, proactive Interconnectedness : Movement: high high (highly uncertainty, ‘inspirational’ management, short term? Long term? Improvising, muddling through, cake –walk management 30/04/2023 Tilahun Teklu 21 Typology of environment based on Emery and Trist (1965) Environment Type Causal texture Appropriate Copying Techniques Movement Connectedness Placid-randomized Placid Random Tactics Placid-clustered Placid Clustered Strategies Distributed-reactive Distributed Reactive Operations Turbulent Turbulent Mutual-causal Multilateral agreements 30/04/2023 Tilahun Teklu 22 Typology of environment based on Emery and Trist (1965) Environme nt Type Causal texture Appropriat e Copying Techniques Movement Connectedness Placidrandomized Placid Random Placidclustered Placid Clustered Strategies Distributedreactive Distributed Reactive Operations Turbulent Turbulent Mutual-causal Multilateral agreements Managerial decision States Causation Tactics Certain Computational Uncertain Inspirational Certain Uncertain 30/04/2023 Outcome preference Appropriate Problemsolving strategies Tilahun Teklu 23 Go to organization structure lecture! 30/04/2023 Tilahun Teklu 24 LAWS Law of requisite variety “Organizational differentiation must match environmental complexity! Law of requisite flexibility “Organizational integration must match environmental rate of change! 30/04/2023 Tilahun Teklu 25 Complex And Changing. Complex And Stable Simple And Changing Simple And Stable High Uncertainty. Moderate Uncertaint y Moderate Uncertainty Low Uncertaint y Organic And Differentiated Mechanistic And Differentiated Organic And Homogeneous Mechanistic And Homogeneous High 30/04/2023 Tilahun Teklu Low 26
